Finance Globe
Common Reasons for a Car Insurance Premium Increase
It’s frustrating to find that your car insurance premium is on the rise. Not only will this impact your budget, but it may also lead to a situation in which you have to search for a new provider.
There are many reasons for a car insurance premium increase, some of which you have control over and others of which you don’t.
Let’s start by examining a few of the things that you can’t control:
• Repair costs
• Number of uninsured motorists in your state
• Insurance fraud
• Increased number of accidents in your state
While you have no control over these factors, there are some you can focus on in an attempt to keep your rate down:
• Claims. If you have never filed a claim in the past, it works in your favor in regards to your insurance premium. However, if you’ve filed several claims in the recent past, you can expect your rate to increase.
• Traffic violations. Car insurance companies reward people who are safe drivers. Just the same, a traffic violation shows that you may not be driving as safely as you could, thus making you a bigger risk to insure.
• Expired discounts. One of the best ways to save on car insurance is through discounts offered by your insurance company. Unfortunately, these can expire every now and again. Some of the most common discounts include: multi-policy, good driver, automatic payments, and membership in a particular club or organization.
• New home base. If you move from one city to the next, you can expect it to impact your premium. It’s your hopes that your premium decreases, but don’t be completely surprised if the opposite happens.
If you experience a car insurance premium increase, the best thing you can do is contact your provider for clarification. They can provide you a reason for the increase, as well as your options for saving money.
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Comments 1
There is more to the automobile rate setting in today's world ... insurance providers generally will pull your credit reports from one of the three major credit bureaus and LexisNexis as a start. Some states such as Massachusetts, Hawaii, or California, ban the practice of using credit scoring for rates. While you have a clean driving record and live in a low risk area with a safe vehicle you get hit with higher rates due to your credit. Seems illogical but, the insurers view your credit as a sign of your life style and habits which leads to factoring the results into your rates and how you will handle claims. Also, remember that those under 26 years of age and those older folks starting in their 60's are considered higher risks and likely will be rated higher with increased premiums. Those over 55 years old can help reduce their premiums by taking insurance industry recognized training that generally will lead to a 10% rate reduction. At one time for the younger people there was rate reductions for grades in school along with receiving formal drivers training from accredited drivers training programs.
As an aside, you may want to think about the size of deductibles you can fit in your budget ($1,000 versus say $500 or $250) and your coverage limits since these will also drive your rates (State mandated minimums versus $300,000 to $500,000)? Insurance companies do not like small claims due to what it really cost for processing, so if you can pay for the small things and not submit a claim there may be savings on your horizon? One last comment ... don't marry your insurance carrier ... shop around as you may be surprised at the rates available. Insurance Companies adjust their rates based on their claims experience, and that of the areas they serve as well as the insureds under coverage with them so, if they have some big losses ... you may have rate increases to offset others. Look around for rates. Independent Insurance Agencies may have access to multiple carriers versus the captive agent that only writes insurance for one company. Spend time seeking the best coverage for the best rate. Note, many independent agencies can seek insurance carrier rates for you and all you do is provide the base information and they use the digital world. In 2017 I looked for new insurance rates and had seventeen quotes from as many carriers and my agent only had to submit the information once (the computer did all the work). As to the credit aspects ... my insurance seeking only generated soft inquiries in the credit bureaus and with LexisNexis (assume this is the norm). Further, if you have not checked your credit reports for accuracy it may pay to do so. In the "old days" pre-internet, it was so much simpler and don't believe the insurance ads on television. One ad stated they would save me over $700 which is more than I pay ... get real!!!
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