According to the National Association of Insurance Commissioners, the average U.S. auto insurance expenditure increased by 5.3% (to $935.80) in 2016 (from $889.09 in 2015). Increases like these aren’t uncommon, but do you know why your car insurance premium seems to jump up suddenly?
An insurance agency will never raise your premium without a reason, but there are several root causes as to why your car insurance premium may have gone up. Some are fairly obvious, but others may not be. Here are a few common reasons an insurance agency may have increased your premium.
Violations and Accidents
This is one of the most common reasons that an insurance agency will raise your premium. Violations such as a DUI or multiple speeding tickets tell your insurance agency that you’re at a higher risk for an accident than drivers with no violations. Likewise, an accident signals to the company that you may be more likely to have another accident, prompting an increase in your rates.
Comprehensive Claims
Filing a claim can often lead to an increase in your insurance rates — even for incidents that are out of your control, such as hail damage and other acts of nature, fire, theft, glass breakage, and vandalism. In some cases, you may not have much of a choice but to file a claim. But for less expensive fixes, you may want to consider whether a potential rate increase is worth filing a claim over.
Claims in Your Zip Code
Rates are often calculated based on insurance data available for your zip code. This means that your rates may increase if your car is registered to an area wherein a high number of claims were filed for weather-related incidents or other comprehensive claims. As unfair as this may seem, it’s simply seen as a bit riskier for companies to cover vehicles in your area.
Age
Your insurance premium is likely to increase after you turn 70. Many insurance agencies view senior drivers in much the same way they view teen drivers. That said, senior discounts may be available in your area to help keep your rates lower.
Changes to Your Credit Score
If your credit score has recently gone down, you should expect your rate to increase. Many insurance agencies use credit scores as a way to gauge the likelihood of someone filing a claim. Currently, there are only three states in which insurers are prohibited from using a client’s credit score to help determine their rate.
There are a few other possibilities as well, such as the loss of a discounted rate, or a lapse in insurance coverage, but generally, your rate increase will be covered by one of these reasons. If you’ve found that your insurance rates have increased and you want to shop around for new coverage, we’re here to help. Contact us today for a quote or for additional information.