Why Did My Car Insurance Go Up?
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Insurance companies increase premiums when a driver's risk profile goes up, such as after getting into an at-fault accident, accumulating traffic tickets or adding a new sports car. However, market conditions beyond the driver’s control, like inflation and rising car prices, can contribute to higher auto policy premiums, as well.
14 Reasons Why Your Car Insurance Rate Increased
Several reasons can point to a higher auto insurance rate — from a negative entry on your driving record to adding another high-risk driver or vehicle to your auto policy. The increase may also stem from reasons beyond your control, such as inflation or the rising cost of new cars and healthcare services.
#1 You Have Speeding Tickets and Moving Violations
Expect higher premiums when an officer slaps you with a speeding ticket or some other moving violation. Speeding can reduce your control over your car, resulting in a car crash. Failing to safely stop at a crosswalk can lead to an injured pedestrian. These dangerous driving behaviors increase your likelihood of filing a claim and your insurance company having to pay the victims for your reckless driving.
Other common examples of moving violations include:
- Running a stop sign or red light
- Switching lanes without signaling
- Driving without a license
- Not wearing a seat belt
- Not stopping for a school bus when children are boarding or exiting
#2 You Got into a Car Accident
Insurers apply an accident surcharge when you get into a car accident — at-fault accidents result in higher surcharges. Unfortunately, you’re not always safe from accident surcharges even if the other driver was 100% liable, either. Some insurance companies raised rates by 10% or more when their customer was not at fault, according to the Consumer Federation of America. Rates may stay high for three to five years.
Purchasing accident forgiveness will dismiss the premium surcharge from your first at-fault accident.
#3 Medical Costs Are Rising
Since car insurance covers medical expenses, rising medical costs can cause auto premiums to increase. Your medical bills are covered under Medpay/PIP coverage, while liability coverage pays for other people’s medical costs when you can be held responsible. If medical providers are increasing their prices, insurance companies will also need to increase auto premiums to pay for medical costs.
#4 More Drivers on the Road
More drivers sharing the road creates more opportunities for a car crash to happen. It may be necessary for insurance companies to raise prices to accommodate the increased risk.
#5 You Moved to a Higher-Risk Zip Code
Auto insurers use your address as a rating factor because the average number of claims filed and crime rates can vary by location. For example, car insurance costs may go up if the insurer notices a spike in claims from your area. If there are multiple claims for vandalism, your car may be the next target. Similarly, increasing claims for speeding-related collisions suggests the roads in your area are dangerous for all drivers and insurance companies can raise rates accordingly.
#6 Your Credit-Based Insurance Score Dropped
Drivers with a low credit score are more likely to pay higher auto insurance rates because there is a correlation between your credit history and likelihood of filing a claim. Conversely, drivers with good credit scores are perceived as more responsible and less likely to file a claim. Fortunately, you can see your premiums return to normal by improving your credit score over time by reducing your total debt and making payments timely.
Using credit scores as an insurance rating factor has been banned or limited in some states, like California, Hawaii and Maryland
#7 You Were Disqualified From Certain Discounts
Maintaining a safe driving record can qualify you for multiple discounts, including an accident-free discount, claims-free discount and more. However, just one accident can pause 10% to 30% in savings until you rebuild your safe driving record.
This applies to other discounts, too. For example, if a married couple divorces and each gets their own car insurance policy, that’s savings lost from a multi-vehicle discount.
#8 Cars Are More Expensive
Car prices matter to insurance companies because that is the cost to replace your vehicle if it’s totaled in an accident. Kelley Blue Book reported a 40% increase in the average cost of a new car from 2016 to 2021. If car prices are steadily increasing each year, insurance companies need to increase premiums to keep pace.
Unfortunately, other market factors, such as the global chip shortage, keeps supply low and prices high for some car models.
#9 Vehicle Repair Costs Are Increasing
Newer models are equipped with various safety features, such as anti-collision warnings and lane assistance, to protect the driver. While these can reduce collisions, the added technology can increase the cost of replacement parts and create a demand for specialized technicians who can troubleshoot and repair various sensors and computerized features. Car insurance companies raise premiums to cover these costs when your car is in the repair shop after an accident.
#10 You Added a High-Risk Vehicle to Your Policy
Sports cars and luxury cars are more expensive to insure than non-luxury cars due to the higher cost of replacement parts and replacing the car itself if totaled in an accident. You should also check if your car has a high theft rate because purchasing one can result in higher premiums. Cars with higher thefts rate typically face higher premiums, as well.
#11 You Added a High-Risk Driver to Your Policy
Even with a clean driving record, adding a driver with a high-risk profile can increase your car insurance premiums considerably. For example, teenage drivers are often subject to higher rates because their driving inexperience increases the likelihood of a collision. Similarly, adding a driver with a history of DUIs and moving violations will increase the cost of your auto policy.
#12 You’re at a Higher-Risk Age
If you’ve always been on your own auto policy, you likely paid higher rates as a teenager and in your early 20s because you have less driving experience. Generally, rates will drop once you reach age 25 (assuming you maintain a clean driving record). However, premiums can rise again around 70 years old because senior drivers can pose a higher risk due to hearing or vision impairments and slower reaction times.
#13 You Have a Coverage Lapse
A car insurance lapse in coverage is a period of time when you did not have coverage. Just one day without coverage will create a coverage lapse, resulting in higher rates when you find a new insurance company. Lapses in coverage can occur for several reasons:
- Your insurance carrier canceled your policy for nonpayment.
- Your insurance carrier refused to renew your policy and you did not find a new insurer before the termination date.
- Your driver’s license was suspended and you no longer needed car insurance because you were not allowed to drive.
- You canceled your auto policy because you would not be driving for an extended period (e.g., deployed on military duty).
- After shopping around, you mistakenly scheduled your new policy to start after your current policy’s end date or you canceled your policy before buying the new policy.
#14 You Committed Insurance Fraud
Insurance fraud occurs when you lie to your insurance carrier on a claim with the intent to profit from the claim payout. It can also be misrepresenting your risk on a car insurance application to secure a lower premium (e.g., under-reporting the number of drivers in your household).
Some forms of fraud are serious crimes and can result in jail time. Examples of car insurance fraud include:
- Staged auto accidents
- Planned vehicle theft or vandalism
- Over-reporting the value of your losses
- Using another address on your application to secure lower rates.
Find a cheap auto insurance policy today. SmartFinancial’s free online tool analyzes insurers in your area to match you with a policy that meets your coverage needs and budget. Just enter your zip code below or call 855.214.2291 to receive your free car insurance quotes.