Wednesday, June 15, 2022

Can Car Insurance Companies Increase Premiums

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How Long Does A Car Accident Stay On My Insurance

Auto insurance rates expected to increase nationwide in 2019

The longer ago you made a claim on your insurance, the less of an impact it will have on your rates. Your rates will go up the most immediately after the crash, then return to normal after between three and five years.

In our research, we found that if you were responsible for a crash within the last six months and made a liability claim as a result, your rates will increase by about 60% the next time your policy renews. That increase will go away gradually over time, with rates lowering to about 47% higher than normal after two years and only 2.4% higher than normal after four years.

Time since at-fault crash
$634

Prices are 12-month quotes for minimum coverage in Illinois. Policyholder made an at-fault property damage liability claim of $2,000.

Car insurers have found that drivers who have been responsible for a crash recently are more likely to make another claim as a result, insurers charge these drivers more. However, the longer ago that incident was, the less it will affect your insurance rates.

Look For Bundling Discounts

You can save money by buying auto insurance from a company with which you already have other types of insurance, such as home insurance. You might also be able to bundle your car insurance with pet insurance, if your company offers both.

The wording varies by insurance provider, but bundling discounts are often referred to as multi-policy, multi-product or multi-line discounts. And the actual amount you can save will depend on your location and insurer, but some companies cite discounts of up to 25%.

The Bottom Line On Lowering Your Car Insurance Premium

Heres a summary of the best strategies to cut down on what you pay for your car insurance policy. You can use one or more of these tips to get the lowest possible car insurance rates.

  • Insurance carriers differ in how they use pricing algorithms, and in the customers they want, so comparison shopping is one of the best ways to save.
  • Most companies offer car insurance discounts to those who purchase multiple policies or types of coverage, so consider buying car insurance from the same carrier that sold you your homeowners or renters insurance policy.
  • Installing anti-theft devices such as a LoJack or car alarm could help you save up to 25% on premiums.
  • Opting for a higher deductible if you can afford it, is certain to lower your premium.
  • If you’re a good driver or don’t drive often, consider a pay-as-you-drive or pay-how-you-drive insurance program.
  • Depending on your state, your credit history could influence your premium. Taking steps to improve your credit could help you lower your car insurance rate.
  • Be a responsible driver. There is no surer way to lower your car insurance premium. Taking a defensive driving course could also help you obtain additional discounts.
  • Larger vehicles are more expensive to insure because they’re more expensive to replace. Switching to a smaller SUV, for example, can reduce the amount of money you pay for car insurance.

If you’re looking for additional ways to save, check out Moneys best cheap car insurance for the best deals on coverage.

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What Causes Car Insurance Premiums To Increase

The two biggest problems faced by customers while purchasing auto insurance are,

Finding reliable auto insurance companies

Second, the yearly increase in premium rates

While the first one finds a great solution in the form of online websites selling auto insurance online, the second one is a bit tricky. Customers, being unaware, cast these insurance companies as trying to take undue advantage of customers.

On the contrary, auto insurance experiences several ups and downs, leading to such variable premium rates in consecutive years. Here are a few reasons to explain the steady rise in auto insurance premiums.

How Do Insurance Providers Know About Duis

Why Does Car Insurance Premium Increase Every Year?

Your insurance provider will learn about your DUI and any other traffic violations when it comes time to renew your policy. From there, you will be subjected to the premium increases along with other penalties like license suspension and fines. When your license is suspended, you may need to file an SR22 with your insurance company to have it reinstated.

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Why Auto Insurance Rates Are Increasing

Your insurance company sets your car insurance rate based on a number of factors, and while you do have some control over what determines your rate for example, driving history, filing claims, speeding tickets there are other factors out of your hands:

Increasing repair costs. Since the cost of repairs is going up, particularly because of new vehicle features made with expensive technology, your insurance company might raise your rate to account for the higher claims theyre paying out for repairs.

For example, a simple fender bender with a newer car, equipped with new safety technology, like rearview cameras or sensors, can cost much more than a fender bender with an old car. These complex designs in cars mean more costly materials and expensive repairs.

Increasing medical costs. On a similar note, the cost of medical care is also rising, so insurance companies are maxing out on policy limits to cover the increasing costs of medical expenses. These changes could also result in a possible rise in your car insurance rate.

You moved. When you change where you live, you change where you drive. New areas can mean a different rate since you might be moving into an area with a different type of traffic for example, moving from the gridlocked traffic of Chicago to gravel roads in rural areas.

More drivers means more accidents. One of the biggest reasons car insurance rates are going up across the country is that there are more drivers on the road than ever.

People Are Driving More

Accidents can drive up your premium rate even if youve never been in one yourself. Economic growth, urban sprawl and low gas prices have people driving more than ever, according to the Federal Highway Administration.

And even overall good news can be bad news for your rates. As the economy improves, people drive more miles, Lynch says. The previously unemployed are driving to work, and everyone drives more discretionary miles. This puts more cars on the road at any given time, which increases the chance of an accident.

Lower gas prices may also encourage more frequent driving. The more driving, the more accidents, the more claims and the more rates can go up across the board.

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Why Do Insurance Premiums Increase

As personal and commercial insurance agents, this is an extremely common question that we get from many of our clients. And its completely understandable. Many of our clients are confused or annoyed that their insurance costs have gone up, and dont know why.Unfortunately, the answer is not always simple or straightforward. There are many reasons your insurance premiums can increase, some of them are specific to you, and some are not.

A higher premium or higher rate is often calculated based on a set of factors unique to each insurance company.

A lot of insurance cost and premium changes comes down to something called claims probability.

Why Do Car Insurance Premiums Go Up Every Year

Texans, your credit score could increase your auto insurance premiums

Home> Resources> Why Do Car Insurance Premiums Go Up Every Year?

If the price you pay for car insurance goes up every year, or even every six months, you are not alone. Even when you havent made any claims or logged any traffic violations, theres a good likelihood that you are seeing at least a slight increase each year. Of course, even seemingly small changes in some of your individual risk factors can potentially result in a higher premium. But, as you might have guessed, its not always your individual behavior that triggers an increase in premium.

In order to remain profitable insurers need to collect, on average, about as much premium as they pay out. As real or anticipated expenses rise, insurance companies must figure out how to distribute the cost of those expenses. Anticipated risk associated with statistically similar groups of drivers is a central component for these decisions. But it is often the case that the expenses associated with paying claims rise generally across the state, and are offset with premium increases that affect most, if not all drivers. Think of expenses that tend to trend upward in all parts of the economy: factors that affect increases in the cost of living .

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Car Insurers Are Increasing Their Rates

Insurers usually increase their annual rates by 3% every year. However, there were fewer drivers on the road during the pandemic, therefore fewer accidents, so rates remained generally the same or less than.

Recently, there has been an increase in drivers and accidents on the road, so insurers are raising their prices to meet the growing volume of claims. Additionally, inflation, high car prices, car parts, and labor shortages contribute to the cost that insurers pay for a claim, says Josh Damico, VP of Insurance operations at the car insurance shopping app Jerry.

Progressive, Allstate, and GEICO are a few of the insurance carriers that have approved rate-hike requests among multiple states. Rate hike-increases in November 2021 range from 3% to 12% across various companies, according to S& P Global Market Intelligence.

Why Did Insurance Premiums Go Up

Actuaries use mathematics, financial theory and statistics to forecast the cost and probability of an event. In the insurance industry, actuaries spend a lot of time trying to predict how likely customers are to file a claim. The higher the probability, the more they can justify charging you higher insurance premiums. Its the first of several reasons why your premiums might have risen.

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What Are Ways To Help Lower Car Insurance Premiums

  • Dropping unnecessary coverage, increasing your deductible or reducing coverage limits may help lower insurance costs. Your insurance agent can share the pros and cons of these options.
  • In some states, younger drivers are also able to take driver safety courses like Steer Clear® by State Farm that could lower your premium. Overall, it doesnt hurt and might very well help.
  • You can also check with your insurance company to see if they have a telematics program, like Drive Safe & Save from State Farm. These usage based car insurance programs record the miles you drive and use that information to help determine your premium. The less your drive, the more you may lower your car insurance.

Finding A Lower Car Insurance Premium

4 Causes of Car Insurance Premium Increase in Idaho

If youre trying to lower your car insurance premium, there are several strategies you can use:

  • Drop unnecessary extra coverage: Reducing your coverage will reduce your premium. With older vehicles, it may not be worth maintaining comprehensive and collision insurance policies. The general rule of thumb is to reduce these types of coverage when your annual premium exceeds 10% of your vehicles total value. Keep in mind that you will need to maintain your states minimum insurance requirements to drive legally, so you shouldnt reduce your bodily injury or property damageliability insurance or other required policies.
  • Compare rates: Shop around and compare auto insurance quotes from multiple providers. You may find that you can save a significant amount by switching insurers.
  • Take a driver safety course: Many insurers offer discounts for completing a state-approved driver safety program. These courses are typically six or eight hours, and some states mandate that insurers offer discounts if you complete one.
  • Choose usage-based insurance, if it could benefit you: Several insurers offer usage-based discount programs. These are typically run through an app that tracks things like your braking distance, average speed and driving times.
  • Bundle your policies: If you have homeowners insurance, you can usually get car insurance discounts by purchasing both home and auto policies from the same insurer.

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Common Reasons For Premium Increases: Individual Risk Factors

Lets start with some of the more obvious reasons why your individual rate may have increased over the years. These reasons may include having filed a new claim or having had a traffic violation added to your driving history, adding or changing a vehicle, adding or changing a driver and increasing the amount of your coverage. Of course, if you have multiple drivers on your policy, the possible reasons for annual increases multiply.

Except in the cases of very minor claims, usually less than $1,000, and minor traffic violations, like a broken tail light, any new claim or violation is going to make you appear riskier: all these behaviors are associated statistically with increased risk exposure. If you add a vehicle, then there is something additional to insure, so your price will probably go up. Even if you switch the vehicle you have to one with a different make, model or year, your price may go up if your insurance company thinks the new vehicle itself is not as safe or more expensive to fix. Similarly, adding or changing a driver may increase the price you pay. Lastly, if you decide to increase the coverage limits, add optional coverages or reduce the deductibles on your policy, then your price is likely to go up.

What You Can Control

While a rate increase probably isnt welcome news for anyone, several of the factors insurers use to determine premiums remain within your control.

  • Driving record. Drivers with no accidents, speeding tickets, or other moving violations on their record represent less of a risk to insurers and generally receive lower rates than people with a spotty driving record.
  • Claims history. Your claims history isnt just about whether or not youve been in an accident with another vehicle. Any claim you file may impact your premium, whether your vehicle fell into a sinkhole or a rock went through your windshield.
  • Your credit doesnt just affect the interest rate you receive on a loan. It may also affect your insurance rates if you live in a state that allows insurance companies to use credit-based insurance scores in their rating criteria. People with higher credit scores typically qualify for lower insurance premiums.
  • Late payments. If you dont make your payments on time, your insurer may raise your car insurance rates.
  • The car you drive. Some cars cost more to fix. If you drive one of them, youll probably pay more.
  • Whos on your policy. Adding a driver, especially a teenage driver, to your policy will increase your rates.

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Is It Possible To Avoid Increased Insurance Costs

Bracing for a rate increase may seem stressful, but having the knowledge that your auto premium could go up can help you prepare and act quickly.

  • Review your current policy: The first step in prepping for a premium change is understanding your current insurance policy. Reviewing your policy and knowing your coverage types, limits, discounts and premium can help you learn about your policy. If you arent sure how to analyze your policy, you might want to talk to an agent. Be on the lookout for your policys effective dates and see if your next renewal is available. If so, check the premium on that policy to see how your rate will be affected in 2022.
  • Take advantage of discounts: Discounts can be one of the easiest ways to lower your premium. Reviewing your current discounts might help you identify areas where you could save. If youre shopping for new coverage, you could look for a company that has several discounts that might be available to you.
  • Check your other policies: Dont forget about any other insurance policies you might have. Bundling your major policies, such as home and auto, with one carrier could potentially help you save money on both. Even if you cant offset your auto insurance increase, you may be able to find savings on your homeowners insurance or renters insurance policy. Reviewing your entire insurance portfolio is a good way to make sure you are properly insured but not overpaying for coverage.
  • Why Did My Insurance Premium Increase I Havent Been In An Accident Gotten Any Tickets Or Made Changes To My Policy

    Traffic Tickets Can Raise Auto Insurance Premiums by 22 Percent or Even More

    Sound familiar? My friend asked me this last week, and its a question insurance agents receive all the time. When the cost of your car insurance goes up at renewal, the increase can feel unjustified especially if youve been insured with the company for a long time and havent had any tickets or accidents.

    I felt the same way when the cost of my auto insurance increased by 28% last year .

    But before switching insurance companies, there are two important things to keep in mind.

    First, rate increases arent unique to any one insurance company or geographic area. Premium increases are impacting drivers across the country for a variety of reasons. In Washington state, for instance, a 2021 change eliminated the use of credit scoring in determining insurance rates. That has meant a change in rates for most of our clients.

    Second, and more importantly, there are things you can do to off-set any premium increase you receive.

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    How Are Auto Insurance Rates Calculated

    Have you ever wondered how auto insurance providers calculate their premiums and why different insurers offer different rates? According to Insure.com, insurance companies collect specific data to figure out how much risk you pose to them and how likely you are to make a claim. Every insurer makes their calculations separately and weighs the data and rating factors differently, which is why premiums vary from one company to another.

    Your car insurance provider gathers information about risk factors that impact your auto insurance rates from the quote form you fill out. Then, behind the scenes, they use their algorithms to make an informed guess on how much risk you pose and come up with a quote. The safer you appear to be, the less you’ll pay for auto insurance. The riskier you seem, the more you’ll pay.

    If you get a high quote, it’s likely that one of the data points has indicated you’re riskier to insure. It can also be because the insurance provider uses a premium calculation method that doesn’t favor your personal details. Certain risk factors may not be apparent, such as your credit history. However, insurers have statistical data proving the relevance of certain non-driving rating factors.

    It’s essential to know what makes your car insurance go up so that you can take the necessary measures to keep your premiums affordable. However, you have to make sure you have enough coverage to help you prevent a devastating financial loss in the event of a major accident.

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