Why Car Insurance Goes Up

When car insurance rates increase, it’s likely premiums rise as well. Unfortunately, you can’t change increasing insurance rates. Even if you haven’t filed a claim and have a clean driving record, your car insurance premium may increase.
car parked on side of road

By understanding the factors that influence insurance rates, you can learn how you may be able to lower your premium. These are some common reasons that car insurance rates increase.

Your city or state rates increased. A tornado, hailstorm or another unanticipated event can increase car insurance claims from drivers in your area. In addition, the costs associated with these claims are also growing—medical services are more expensive and newer vehicles are more costly to repair because of their advanced technology. So even if the claim isn’t yours, the number and cost of claims from other people in your area may boost everyone’s insurance rates.
You live in a new ZIP code. Moving to a different residence a couple of blocks away can increase your insurance rate. ZIP codes are considered for insurance rates, so if you move to an area more densely populated area with a higher risk of theft, your rates will likely increase. In addition, some of the coastal regions that are more prone to flooding and hurricanes can affect your insurance rates.
You have an accident. A car accident can be costly, whether it’s your fault. If it’s an at-fault accident, your rates will most likely increase. In addition, depending upon your state and insurer, having an accident can label you as a high-risk driver and cause a rate increase. You may be able to avoid negatively impacting your insurance rate by paying out-of-pocket for minor damage rather than submitting a claim.
Your credit score dropped. Credit history often factors into an insurance score, determining your car insurance rates. Poor credit history can significantly impact your insurance score since research indicates that people with lower insurance scores are more likely to make a claim. You can work to improve your credit score, reduce credit card balances and pay bills on time, which may help decrease your premium.
Your age and marital status may impact rates. Typically, middle-aged drivers have lower insurance rates than young and senior drivers, and married drivers often pay less than single drivers.
You have violations on your driving record. Speeding tickets and multiple moving violations, especially a DUI, can increase insurance rates. Typically, your insurer won’t raise your rate for a non-moving violation such as a parking ticket.
You add vehicles and drivers. Suppose you buy a more expensive car or add new drivers to your policy. Your premium will likely increase, especially if it’s a teenage driver or a family member with a poor driving record.
You have been uninsured for some time. If you’re reinstating a policy or starting a new one after being uninsured for a while, you may pay more for insurance.
You lose your discount. If you earned discounts for having no tickets or accidents on your driving record, but then had a traffic citation or an accident, your car rate increase is two-fold. First, you may be charged for the violation and accident, but second, you could lose any associated discounts. You could also potentially lose discounts for being a homeowner, going paperless, and having more than one product insured with the same company.

Other Influences on Car Insurance
Another trend affecting car insurance costs is inflation. When unemployment falls, more people for work and leisure since there’s more disposable income. Having more money also means purchasing more expensive vehicles, which are costlier to fix and replace if damaged. These all increase the cost of car insurance premiums.

States strongly regulate insurance premiums, and any rate increases go through a complex review and approval process. Some states allow insurance companies to file and use new rates while under consideration. However, if the state doesn’t approve the rate increase, customers who paid the higher rate during the review period will receive a refund.

Talk With Us
Numerous other factors can influence car insurance rates and premiums, and your insurance company can help determine what choices you may have to reduce your car insurance premium. RCU Insurance Services can help you get a car insurance policy that provides the best value for your particular driving situation.