Why Do Car Insurance Premiums Increase?

Many policyholders ask why did my car insurance go up all of sudden. Considering that vehicle insurers have been keeping premiums steady for a long while you would suspect that there is a change somewhere in their circumstances that lead to car insurance rate increase. It may look to be all of sudden at renewal but there can be fundamental shifts on individual particulars that are bases of policies. And that results in car insurance premium increase of various sizes depending on the underlying influences.

The ideal scenario should start with a policyholder who has done a comprehensive auto insurance company comparison before choosing the best car insurer for him/her recently. This would suggest that he/she started with a highly competitive and reputable insurer. This assumption would minimize the possibilities that auto insurance rate increase is due to incompetence of the company. Therefore, it would be due to changes in policyholder’s circumstances.

We should also assume that the claim and driving history remains the same. So, the car insurance premium increase is not because of accidents and moving violation traffic tickets. The question of how much does insurance go up after an accident is discussed in another post on this site, if you are interested to read. Now we can have a look at several other and more personal reasons why auto insurance rate increase might happen.

   Deteriorating Credit History: Many policyholders have been complaining about sudden around twenty percent increase in their premium. Latest financial problems caused hardship across the country. People who were not worried about issues in their creditworthiness suddenly start realizing that they are having a few problems with payments in time. Some of these problems may be temporary while others are unfortunately prolonged.

Policyholders and new applicants with deteriorating credit scores are suffering now that many companies are looking at credit history. Credit based insurance scores are now here and we have to deal with it. We can actually take advantage of it to get even more savings. If they are causing car insurance rate increase for some people they must be having the opposite effect on drivers with good credit history.

Unfortunately this alone can cause as much as twenty percent car insurance premium increase. If this is something you suspect happening in your case you should check your credit score. There are ways of checking it for free. You can also check how to improve credit score and car insurance rates and see if there are things you can do to reduce the impact.

   Other drivers in the house: This would be explained better with a simple example. A middle aged couple with pretty low car insurance rates may see a sudden auto insurance premium increase as soon as one of their children comes to driving age. Companies consider the chance of another driver in our household getting the keys to the insured automobile. They do not need to be related to the policyholder. Their existence in the house would be enough for car insurance rate increase.

There may be a way to reduce their impact and you should discuss this possibility with the insurer. For example, they may explicitly be excluded from the policy. This may be possible completely or in some states it would only reduce the amount of payment they can receive and it would usually be the minimum levels set by the state for liabilities.

Car insurance for married couples or people in a committed relationship would usually be cheaper. However, a recent marriage to a driver with bad driving history would make it expensive for the other spouse/partner. Possible ways of reducing car insurance premium increase in such cases discussed in that post separately.

   Change of the insured automobile: Some makers and models of cars are cheaper to insure. When you are looking for a new car you need to keep this in mind. Sport cars and SUVs are the obvious ones that will cause auto insurance rate increase. Buying an expensive car will mean that you increase the valuation on collision and comprehensive coverage that can result in higher premiums. Specifications of vehicles insured are one of the key factors in premium calculations. Any changes in them will affect the rates positively or negatively.

The influence of vehicles insured on premiums is substantial. That is why you should make sure that you look into possible auto insurance premium increase before committing yourself to buying a new vehicle. We have a another page totally dedicated to insuring cars and you should have a look at it before moving away from this site.

   Recent Move: You may have moved just down the road a few blocks and not thought much of it. But even such move can be influential in many ways. This is especially true in cities because they usually have diverse neighborhoods and differentiating crime and auto theft rates. You can read about getting better deals with your city auto insurance further. You could see a huge increase on your premium if you move from suburbs to city center. Even changes in your work or workplace can cause considerable auto insurance rate increase because it would increase the commute (and yearly mileage).

It may not necessarily be the zip code that is problem. Changes in your home can affect the premiums because of changing facilities. You may have had a garage or private parking with your old accommodation and losing it when you move would mean that you now have to pay more to insure your vehicles.

   Ageing: Going over 70 years old is another reason. Many companies increase rates for older motorists. This topic of auto insurance for older drivers is again discussed in another article in details.

   What to Do when Car Insurance Premiums Increase

Probably the first thing to do is to ask your insurer why did my car insurance go up? They may have gotten something wrong and it may be corrected quickly upon explanation. Or you may come to an agreement on how much they can increase the premium. However, this should not stop you from looking elsewhere as well. Getting a few quotes and making car insurance quotes comparison online show exactly where you stand at this moment. It may be that your insurer is still one of the cheapest when you take everything into account.

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