Why Did My Car Insurance Go Up?

Fran
Fran Majidi
January 21, 2020

You are frugal with money. You have a good credit score and have had zero accidents in the past few years. You haven’t even gotten a ticket. Whereas your car’s value has depreciated, which should make it less expensive to insure, your insurance rate went up. What gives?

Car insurance, even home insurance, can be affected by a number of factors, some of which you have no control over. For instance, if the area in which you live suffered a wildfire that destroyed many homes, your home insurance rate would go up, even if your home remained untouched by the flames and you filed no claim.

The same goes for car insurance. There are factors you can control to keep your car insurance rate low but when other people file too many claims, your insurance rate takes a hit too. Also, cars are becoming more expensive to insure due to safety features and other technological advances. When there are exorbitant losses on the part of insurance companies, they raise rates to offset those losses. Insurers always have to make sure their funds are at a stable-enough level to tackle the next great catastrophe.

That’s the short version of a much longer and more complicated story about how insurance works. Below, we offer some information on the factors that cause car insurance rates to rise. However, if you think your insurance company is overcharging you for car insurance policy, you may save quite a bit each month if you shop and compare car insurance quotes to see who will offer you a fair price for the coverage you need. 

How to Lower My Car Insurance

You are not powerless! You can lower your car insurance rate! Some of these steps may take weeks or months to yield results but you’re sure to save some money when they do.

Raise Your Credit Score

There are a few things you can do to lower your car insurance. For instance, if you live in a state that uses credit scores to determine car insurance rates, you can make sure to pay your bills on time. Also, lowering your credit card balances will help too. Credit scores shift and change, but to keep your car insurance rate low, you’ll need to commit to taking care of your personal finances in a timely manner always.

Avoid Tickets

Getting pulled over is a drag but the price you pay afterwards is even worse. Avoid speeding and running red lights and stop signs. Moving violations greatly impact your insurance rate because they are red flags signalling risky driving behavior. While different insurers use different formulas to calculate risk, they all look at driving history to determine car insurance rates.

Avoid Car Accidents

If you are involved in an accident that was your fault or if you have gotten several tickets, your rate will go up at renewal time. If your insurer offers accident forgiveness, which only overlooks an initial accident, your rate may remain the same. However, not all insurers offer accident forgiveness and none of them forgive multiple accidents.

DUIs Are Bad News

DUIs are another reason your rate may go up (not to mention all the expenses you’ll incur from a DUI charge). Drinking and driving is a surefire way of getting a severe rate hike for many years, so you’re best off staying sober before getting behind the wheel.

Get Married

Married people’s rates are always lower because there is a strong correlation between married people and safer driving behavior. While saving money on car insurance never caused anyone to tie the knot, it’s definitely one of its perks!

Buy a Home

Homeowners are also considered lower-risk drivers. Assuming you’re paying your mortgages on time (your credit score will reveal otherwise), homeownership shows that you’ve assumed and are maintaining a higher level of responsibility. Years of statistics have shown that people who own homes drive more safely so make sure to let your insurer know if you own your home.

Drive Less

The less you drive, the less risk you pose as a driver. Many people choose to live near their jobs for many reasons, saving money on car insurance being a good one. It’s important to let your insurer know if you’re driving 5,000 miles a year or less because mileage that low should yield a very dramatic rate decrease.

Don’t Let Your Insurance Lapse

Most people don’t understand that it costs less in the long run if you keep your car insurance active and up-to-date than if you cancel it for a couple of months. Even worse is if you let your policy lapse by not making payments, without giving your insurance agent any notice.

Why Auto Insurance Rates Increase Without Accidents, DUIs and Tickets

Even if you do everything by the book, your car insurance may go up due to factors that are simply out of your control. Take the wildfires in California. Consider the millions insurers have had  to pay so that residents can rebuild their homes. Naturally, all homeowners insurance rates across the state have gone up to offset the major deficit left by the numerous claims filed by homeowners. The same logic applies to car insurance. Below are some factors that have caused auto insurance rates to increase for everyone.

Costly Safety Features

Since the early 2000s, when cars became more technologically advanced, cars have become more expensive and more costly to fix. So, while you may benefit from a discount for having a car with the latest safety features, you will pay more in insurance premiums for them too. Cameras and sensors are costly to fix. It’s as simple as that.

Distracted Drivers

Smartphones have created a nightmare on the roads. Distracted driving is possibly the number one reason car insurance rates continue to rise for everyone (yes, everyone). In 2017, distracted driving claimed 3,166 lives in the U.S. Teens on their cell phones are not the only ones having accidents though. According to the CDC, there are more than 1,000 injured in crashes every day due to various forms of distracted driving. The causes range from drivers taking their eyes off the road, taking their hands off the wheel or just mentally drifting off until it’s too late to prevent a crash. Even 5 seconds of not paying attention can cause expensive losses. If a car crash doesn’t end up in physical injury you can count on costly property damage, especially on cars with the latest technology.

Extreme Weather

As our climate faces some challenges, we will continue to see extreme weather conditions throughout the country. Over the past few years, there have been numerous natural disasters, ranging from earthquakes and floods to hail storms and tornadoes. These storms continue happening in record numbers. Not only have these storms caused a surge in homeowners insurance costs, but they have cost insurers billions in car insurance claims because comprehensive car insurance covers damage caused by natural disasters.

No-Fault States

If you live in a no-fault state you’re probably seeing the highest rate hikes. There are many cases of insurance fraud with Personal Injury Protection (PIP) claims, causing prices on this type of coverage to skyrocket. States that have been greatly impacted by rising costs include Michigan, Florida and New York.

Remember that Comprehensive Claim?

Even if you weren’t at fault in an accident and simply filed a comprehensive claim for something like hail damage to your car, for example, you should expect that your rate will go up. Depending on your insurer, it may go up a little or it may go up a considerable amount. How much your rate goes up depends on how much you were paid out.

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