Many people ask, “Why did my car insurance go up?”, and sometimes the answer is obvious; for example, if you were in a car accident. Other times the increase doesn’t make sense until you do some research. The bottom line is that insurance rates increase in direct proportion to clients’ risk factors.
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Insurance companies have many reasons to raise your rates. Your driving history and the type of car you drive are only the tip of the ratings iceberg. A few of the most common reasons are listed below.
Why Did My Car Insurance Go Up? Common Possible Reasons
- Have you moved recently? This could affect your car insurance in many ways. You may have moved into a neighborhood that isn’t as safe as your old one. By moving, you could have made your commute longer, thus adding more chances to get into an accident. Relocating to a house that doesn’t have a garage also puts your car at more risk.
- Maybe you changed jobs. Insurance companies know that some occupations require more driving, which not only causes your car to be at risk more, it also increases the wear and tear on your car. For example, you might have been an accountant who stayed in your office all day and clients came to you, but you decided to go back to school for social work and now you must use your car to go meet with clients in different settings.
- Buying a new car also could raise your car insurance rates, especially if your new car is a higher quality then your old car. The age and expense of your car affects the chances of it getting stolen or vandalized. A 15-year-old minivan will cost much less to insure than a brand new sports car.
- If you have bad or even no credit, your insurer will raise your rates. Your credit rate shows how well you pay your bills. Having bad credit or none at all makes it seem like you’re not good with money, so there is a risk that you won’t pay your bills.
- Your car insurance rates will definitely increase if you get into a car accident. Actually, any infringement on your driving record will affect your insurance rates negatively because it shows you’re not a safe driver. However, many insurers forgive your first offence without affecting your insurance rates. Car insurance companies can take up to five years to forgive a driving violation.
- Some insurance companies will raise your rates after you make your first claim, and some will let your first claim slide. Regardless, if you make multiple claims your insurance rates will go up because your insurer is loosing money.
- Your insurer might raise your rates if you’re in a no-fault accident. If they do, it’s probably because they’re punishing you for a previous infraction on your driving record. In addition, if you are in multiple accidents that you didn’t cause, your insurance company will most likely raise your rates. Even though the authorities don’t find you at fault, your insurer will consider you as an at-risk driver.
- One reason that may not be obvious is that insurance companies have to raise their rates to keep up with the economy. Everything from food to gas to labor has gone up in price during the past few years. Insures do their best to keep their prices as low as possible, but they have to make enough money to stay in business.
Why Did My Car Insurance Go Up? Prevention Before the Fact
There are many simple ways to prevent your car insurance from going up. Some of the ways reflect the reasons insurance companies raise their rates mentioned above.
If you are looking for a new car, consider how it might affect your insurance. Everyone wants that brand new Ferrari or Cadillac, but will the raise in your insurance rates be worth having one? If not, think about buying another type of car. Weigh the pros and cons of having the car you want and what it will do to your insurance before deciding which car to buy.
The same is true if you’re moving. If you have the option, research your perspective neighborhoods. One might make your insurance rates increase while another could allow them to stay the same or even decrease. Choose wisely by finding out how neighborhoods will affect your car insurance ahead of time and include this factor in your decision making process.
Maintain a clean driving record. Follow all the rules of the road and don’t cause any accidents. If you do get in an accident and there is minor damage, consider paying for it out of pocket. By not making a claim, you can prevent your car insurance rates from going up.
Improve your credit score or maintain a good one. Even if you had a bad credit score, if you work on it and show your agent you improved it, your insurance company could lower your rates.
Continually look for discounts. Hopefully, when you bought your insurance policy, you asked about all the discounts that applied to you and got them. Insurance companies are constantly developing new discounts in an effort to drum up business. What they don’t tell you is their current clients can take advantage of these discounts as well.
Every once in a while you should see if your insurer has new discounts, and if you find one or more that you qualify for, call your insurance agent and ask for it to be applied to your policy. Even if your insurance rates go up for some reason, you may find some discounts to compensate for it.
Along the same vein, you should get quotes from other companies every few years. It’s free and could save you money. Your insurer might have offered the lowest rate when you first bought your policy, but that could have changed. If you find an insurance company that offers the same type of policy you have for a lower price, ask your current insurer to match it. If they won’t, switch companies.
Why Did My Car Insurance Go Up? Bringing it Down Again
If your rates increase too much, tell your insurance company that you’ll go to another insurer unless they return you to your previous rates. Most of the time agents are allowed to offer better deals that they won’t tell you about until they need to, and many want to keep you happy rather than lose your business.
If your rates went up because you were in an accident and it wasn’t your fault, talk to your agent. Tell her that if you’re rates don’t go down again, you will go somewhere else. This could work after your first no-fault accident or if you have years between no-fault accidents. If you caused the accident, the most you can do is keep out of trouble for a few years and hope your insurance rates go down in time.
In addition to helping to prevent insurance rates from going up, finding discounts that apply to you can help lower your rates after they are raised. The same is true for getting car insurance quotes and possibly switching companies.
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