Reasons Why Car Insurance Rates Often Increase

Reasons why your auto insurance rates often increase include things like traffic violations, accidents, and no proof of insurance. Auto insurance rates vary according to a variety of different reasons.

Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 26, 2020

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Here's what you need to know...

  • Many factors influence your car insurance premiums
  • Poor driving records, age and geographic location can increase your monthly payment
  • Living in a crime-ridden area can also increase your annual insurance premium

It is difficult to answer the question of why insurance premiums always increase.

There are a number of reasons that this could occur. For example, your premiums might increase if you continue to have speeding tickets, cause a number of accidents, add young drivers to your policy, and more.

If you live in an area that is crime ridden, you could see an increase in your insurance premiums.

Many people aren’t aware that car insurance companies track the crime rate in areas to calculate risk in terms of car theft, breaking into a car, stealing tires, and more.

Just because your car insurance is increasing with one company doesn’t mean that this is the case with every insurance company.

If your rates continue to increase, then it is time for you to get quotes from other companies to see if the rate you are paying is comparable to other car insurance companies out there.

Enter your zip code above to compare car insurance rates today.

Is there a limit on the number of increases a car insurance company can make on my car insurance?

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Yes and no. Every state’s Department of Insurance (or similar entity), determines what an insurance company can charge for insurance.

They do make allowances, typically in percentage rates, for specific types of drivers. For example, teen drivers and drivers with bad driving histories generally will pay more for their insurance.

In some states, there is actually a maximum amount set in place.

In these states, if an insurance company wants to increase its rates more than the allotted amount, it has to present its case to the insurance commissioner showing the cause for the increase as well as proving that it is needed.

For instance, California, that has the highest amount of car theft in the entire country according to the Insurance Information Institute.

In this case, insurance companies could petition to charge higher rates because they are paying out more in claims, which hurts their overall company.

Why did my insurance rates go up after an accident that I didn’t cause?

Typically, this happens when you are in an accident with an uninsured driver. If you have to turn to your insurance company to help pay for the damages to your vehicle, then your insurance company will increase your rates because of the claim.

The good news is that your rates won’t be nearly as high as they would have if you actually caused the accident and got a ticket. The bottom line is that if you file a claim, then your rates will likely increase.

Another reason that you may see an increase is if you got a ticket from the accident. Perhaps you didn’t cause the accident, for example, but you were speeding when the accident occurred, which resulted in a ticket.

If you didn’t file a claim and you didn’t receive a ticket, then you should call your insurance company and inquire about your increased rates.

There may be something on your driving record that you aren’t aware of that has caused the increase to occur.

Can I leave my car insurance company if it keeps increasing my rates?

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Yes, you can leave your insurance company for any reason at all. If it continues to increase your rates, that is an excellent reason to make a change.

Before you do, however, you should check to ensure that what you are paying isn’t simply the going rate with every insurer.

In addition, you should never leave one insurance company without another active policy. If you do, and you drive, then you will be driving illegally.

The Consumer Watchdog is a good place to see if your insurance company or any others you are considering have an overall reputation problem. This will help you to make a better choice when it comes to your car insurance company.

If your rates keep increasing, then it is time to look at your other options. Because you aren’t obligated to make a purchase when you get a quote, you can compare prices to see if you are paying more than you should.

Enter your zip code below to compare car insurance rates today!

References:

  1. https://www.doughroller.net/insurance/25-factors-that-affect-auto-insurance-premiums/
  2. https://www.thebalance.com/how-to-get-your-driving-record-527249
  3. https://www.iii.org/
  4. https://www.allstate.com/tools-and-resources/car-insurance/speeding-ticket-and-car-insurance.aspx
  5. https://www.thezebra.com/insurance-news/2775/consequences-of-driving-without-insurance/
  6. https://www.consumerwatchdog.org/
  7. https://www.allstate.com/tools-and-resources/car-insurance/how-to-compare-car-insurance-rates/
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