Car Insurance Articles

At the beginning of every policy period, you are given a notice of the total amount of your premium cost for the next term. If you are the type of person who has your bills memorized and you see an increase in your premium cost, your curiosity (and perhaps temper) may begin to rise as you wonder why your premium has not only changed, but become more expensive. There are a few legitimate reasons why auto insurance companies increase their customer’s rates, and maybe one of the reasons below pertains to why your rates went up.

You Were in An Accident
Of course your rates went up if you were in an accident! Any time you file a claim with your auto insurance company, your rates are going to increase. Auto insurance premiums are based on a number of factors, one of which is the number of times a driver or policyholder has filed claims over the past few years. The more claims that are made, the more money the insurer is paying to fix the policyholder’s accidents, especially if it was a major accident and the costs were close to or at your purchased limit. If the insurer knows they’ll be paying more to insure you, they will charge you higher rates to try to balance their spending.

The one exception to this increase is if your auto insurer offers an accident forgiveness plan. This plan usually includes rules like no accidents or other traffic incidents for 3 to 5 years as a prerequisite. Then if the driver happens to be in an accident, there will not be an increase in rates for that one accident. The time period to qualify for the accident forgiveness plan could then start over, if the insurer offers it more than once to drivers.

You Were Issued a Traffic Ticket
While receiving a traffic ticket doesn’t cost the auto insurance company money the way filing a claim for an accident does, it still causes your insurer to raise your rates. Just like past claims affect your premium, so do traffic violations and getting tickets. When you have received a ticket for failing to stop at a stop sign, running a red light, or speeding, you are showing a lack of responsibility by failing to comply with traffic laws. You cannot expect sympathy when you say you didn’t realize you were breaking the law, because that also shows you weren’t paying attention to your surroundings. This lack of responsibility or failure to pay attention, represented by a traffic ticket, shows your auto insurance company that you are not as safe of a driver as you should be.

Drivers who do not demonstrate safety behind the wheel are charged a higher premium because statistically they are more likely to be involved in an accident. Auto insurance companies view this as a high level of risk, and the higher the risk a driver has, the higher their premium will be.

Your Insurer Paid Out a High Number of Claims Recently
When auto insurance companies are constantly paying out claims that have been filed, they will be losing money if the premium payments that are coming in do not equal or exceed those costs. To offset those payout costs and continue to see profit, the auto insurance company will increase everyone’s rates, whether or not the policyholder actually deserves it. This reason for increased rates is one of the most frustrating for policyholders. Most policyholders who experience this become furious for being punished because other drivers who are insured by the insurance company are lousy drivers and make the mistakes. It is during these times many drivers look to other insurance companies for better rates. If you are in this situation, contact your insurer and see if there is anything they can do for you to not increase your rates (this is assuming you haven’t received tickets or accidents for a while). If they can’t, start looking around for better rates.

The State Laws Have Changed
This reason for a rate hike is about as frustrating as the reason just mentioned. Drivers and auto insurance companies have no say in this matter and must comply with the state’s requirements and laws.

You’ve Added Another Car to Your Policy
Any time you make a change and add something to your policy, your premium cost is going to rise. Adding another vehicle to your policy is in theory increasing the risk that there will be a future need for the insurance company to pay for a claim that is filed for that vehicle. To keep your rates low, only add cars that have safety features and ones that are not brand new and more expensive to repair or replace. You can always call your insurer to find out the difference in insurance price between vehicles you are considering adding to your policy so you’ll know beforehand how much of an increase you are going to see.

You’ve Added Another Driver to Your Policy
Another driver on your policy also means added risk that there will be an accident and claims filed, especially if the new driver is a teenage driver. Depending on the level of risk this driver has, your rates could increase a little or very significantly. Usually there isn’t much you can do to prevent this increase in cost, except for encouraging the driver you’ve added to your policy to drive safely and possibly set some guidelines for them.

You’ve Added More Coverage to Your Policy
The basic minimum state requirements may be what you could afford a while ago, but now you are able to purchase a better policy that gives you more protection with more coverage. Whether you are looking to add more coverage like personal injury protection or uninsured motorist protection, or just increasing bodily injury and property damage liabilities, your rates will increase to reflect the increase of coverage.

As you can see, there are some aspects of auto insurance rate increases you can control, and some you cannot. It is best to concentrate on those factors where you do have control and do your best to keep your insurance rates the same or find ways to decrease them. If you ever do find out your rates have increased without prior warning, it would be best to contact your auto insurance company to get a better explanation.

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