Why Did my Car Insurance Go up for No Reason?

Many policyholders blame inflation when their vehicle insurance keeps rising a bit every year. Usually, it should be the other way around and rates should come down every year that passes without a claim or traffic violation ticket. So, when you see an unpleasant uptrend you have got to dig deeper and ask questions. This post will discusses possible explanations for unexpectedly raised premiums and try to come up with a plan of actions to take in such cases.

Did Your Auto Insurance Increase for No Reason?

Understandably, policyholders consider switching when they get upset with renewal quotes. It is disappointing and puzzling to see a premium spike out of the blue. Actually they have been very low recently even though it may not look like it. According to one study, current California rates are lower than 1989. Saying that, if they are not making enough or losing money they have no option but to raise prices for everybody across the state. This may be the source of the problems if you are with one of those companies.

Also, it may be a problem that affects a particular region. If it has been suffering from large claims in the last few years that explains the uptick. Premiums are the main source of income for carriers. Therefore, they don’t have much option but to force them up when they face large number of claims from policyholders due to freak weather conditions, rise in auto crime and vandalism or adjustments in state laws.

Why Does my Auto Insurance Keep Going Up?

If you cannot think of any changes in the policy, driving history, listed drivers or other circumstances like moving home or changing jobs you definitely want to get to the bottom of it and see if you can fix one or two issues and things get better. The agent must be able to clarify the situation for you and blaming inflation won’t cut, as it is almost in negative territories lately. Perhaps the first thing you should look at is replacing the company if this has been the theme of each renewal. A small uptick may be acceptable but it shouldn’t surge without a valid explanation. There has got to be an underlying cause for any fluctuation and we will try to list some of them for you below. It could be any one of them or an outcome of combined influences.

   1. It May Be Down to the Car Insurer
It is not unusual to adjust rates every so often depending on various inside and outside changes in carriers. Some are known to be aggressively undercutting everyone else in the market for some time. This may be an attempt to gain a larger share in a particular market. After a while they may feel confident enough that policyholders will not leave them if they start pushing rates up. This may have actually been the plan all along. Perhaps the carrier may be struggling to cope with recent claims or in a process of restructuring. Any one of these reasons can explain why is vehicle insurance going up? Any of these shouldn’t really concern you the slightest. When the problem appears to be originating from the company it is time to look for cheap automobile insurance quotes somewhere else. You should regularly be doing it anyway.

   2. They May Have Run Out of Discounts
Another point to note is that you may have been getting discounts year after year until recently. After a while they run out of them. At that stage, you would see a levelling out of premiums. Slight fluctuations may be acceptable but they shouldn’t be exciting anymore either way. However, this doesn’t mean that another one cannot offer you better rates. You should always do a quick auto insurance quotes comparison online to find out the current position.

   3. Changes in Metrics Used in Premium Calculations
New metrics and factors are used every day that may explain the recent price hike. Your past driving history may be clean but it isn’t the only indicator looked at these days. A few underwriters have already moved to using new indicators to determine who is more likely to make a claim, rather than purely relying on the past data. This sort of a fundamental switch in the way risk is measured can explain why your automobile insurance keeps going up year after year because it is a gradual process that may be affecting you negatively.

   4. Factors that Are Unknown to You
This brings us to the next point to consider. Many people can only count handful of factors that affect vehicle insurance rates like driving history, age, gender, type of automobile and address. These are only some of the long list of points considered. There are a few new factors that are influential in price calculations and you may not be aware of them. If you don’t know what it is to avoid you cannot do the right things to reduce costs. You may be asking why is my car insurance premium rising all the while not knowing drop in credit score can increase rates. Zip code, occupation, education and home ownership status are some of the factors that affect costs more than you may think.

   5. Changes in Demographic Exposures 
There are many internal and external factors that can be responsible for an unexpected premium rise. External ones are influential enough to drive it up even though there is no chance in driving record and personal circumstances. The neighborhood may be seeing increased level of accidents, auto thefts and vandalisms that need to be taken into account. It could even be state level and average car insurance costs may have been moving upwards in the region lately that reflects on everybody. This may be down to competition rather than demographics. Competition is the key to a healthy market conditions. If only one of the top companies pulls out of the state it can affect the prices because of reduced rivalry. They don’t actually need to pull out of it entirely. If several of them stop competing aggressively it will push quotes up.

In any case, you shouldn’t have unexplained high renewal quotes. You can try to talk to them and get to the bottom of it. Some companies may be happy to discuss it with you and few of them may offer little saving to appease you. And others may be blunt about it and give you generic excuses like prices go up. Then you can decide what to do about it. But you shouldn’t be quiet or shy about it and ask questions?

There are plenty fish in the sea that you shouldn’t be overly concerned about it. Get a few quotes for the same coverage you currently have and see if you are seeing unfair premium increases or the provider is still very competitive in the market.