Why Did My Car Insurance Go Up For No Reason

Changes In Your Current Location

If your area has experienced a higher number of claims recently due to perils such as theft or natural disasters, its more risky for an insurance carrier to cover drivers in that location. Therefore, auto insurance rates may go up because the insurance data in your area shows more risk. That means even if you dont make any changes to your policy, your premium may still go up.

Rising Rates In General

In addition, car insurance rates are going up across the board. There are a number of reasons for this, and they largely relate to the higher cost of repairs, increased accidents, higher expenses in medical care, distracted and uninsured drivers, weather disasters, and others. Let’s look at a few of these reasons.

Change In Credit History

Depending on where you live, insurers might look at for determining your premiums. It is a confidential rating that determines the possibility of filing an insurance claim, which can help the insurer in assessing the potential risk it has to carry.

It is recommended that you check your credit reports periodically. There may be errors that you can rectify. Call the credit reporting bureau if you believe there has been a mistake. Fixing that can help you qualify for lower rates.

While a , you can engage in the same steps for improving your rating. Some of the things that could help include paying your bills on time, limiting hard credit inquiries, and settling your credit card balances.

The good news is that if you live in California, Hawaii, Massachusetts, Michigan, and Washington, your credit score may not necessarily be a cause of concern. The National Association of Insurance Commissioners notes that there are laws limiting or prohibiting insurance companies from using credit scores as the basis for evaluation.

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As a Geico customer, you’re probably used to paying a fairly attractive annual premium in exchange for your auto insurance coverage. Unlike some full-service auto insurance companies, Geico is known for charging below-market rates for its policies. Unlike many bargain-basement auto insurance companies, Geico is also known for providing responsive claims service and dispensing prompt payouts to drivers who deserve them. As such, it’s often said to occupy a “sweet spot” niche between discount and full-service providers. In addition, it enjoys excellent customer satisfaction rankings and experiences relatively low turnover rates.

However, Geico has some key drawbacks. While it’s an attractive insurer for mature drivers with stellar driving records, it’s not an ideal carrier for younger drivers with blemished driving histories. It’s known for raising accident-prone drivers’ premiums by more than many other insurance companies. As such, it has developed a reputation as a “trap” company that charges new customers low premiums to earn their business and then jacks up its rates at the first sign of trouble.

How To Lower Your Car Insurance Premium

One way to get cheaper car insurance is to shop around for car insurance, and quoting with Progressive could earn you some lesser-known discounts and savings. You can also check out our auto insurance discounts page for a full list of ways to save with us.

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Other Environmental Risks Have Risen In Recent Years

The cost of auto insurance can rise for a variety of reasons, not only because your state has legalized marijuana or raised speed limits. A rise in uninsured motorists, more extreme weather occurrences, more accidents caused by inattentive drivers, or even an increase in local crime rates can all lead to a rise in your insurance premiums.

Insurance premiums can rise as a result of a wide range of risk factors, especially if these risk factors result in a higher number of claims for the insurance company to payout.

Reason #1 Insurance Goes Up When They Simply Increase The Price Of Insurance

Sometimes, insurance companies revise their rates. When an insurance company has a rate adjustment, its almost always upwards. In some states, those rates have to be approved by the state as reasonable. In other states, theres a concept called File and Use.

File and use is exactly what it sounds like the insurance company raises the rates, files the new rates with the state, and uses them while theyre under review. That review is often a lengthy process because insurance rate filings are complex documents. Its possible the state could deny the increase after the fact, resulting in a refund for some people.

We can think of only a few instances in recent memory where that has happened. If the rates are not approved, the insurer will absolutely give you a refund. The majority of the time, however, the new rates are approved and youre stuck paying the higher rates or shopping around.

Rate increases can often be motivated by profit, such as in a case where stockholders or analysts are expecting a certain set of financial results from the company. But file and use or not, insurers also can raise rates on certain types of business depending on the sort of policy they aim to write.

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Does Your Car Insurance Go Up When You Make A Claim

The short answer: It might.

If you file a claim after an accident or other mishap, there’s a chance your insurer will increase your premium, particularly if youre at-fault for the incident or if the claim is especially expensive. How much? The amount varies based on which insurance company you use, the type of coverage you have, and your driving record. Generally, a claim-related premium increase stays on your policy for three to five years.

To steer away from a claim-related rise in your insurance premium, consider whether you can pay to fix relatively minor damage to your car out of your pocket.

Your Claims History And Driving Record

If youre at fault for an accident, the provider may consider you a higher risk and raise your rates. But, a carrier may also deem you a high-risk driver if you are involved in several accidents for which you were not at fault. An insurer may also increase your rate if you file many comprehensive claims for things like broken windshields, weather damage, or contact with animals, such as hitting wildlife.

What you can do: Avoid accidents. Pay out of pocket for minor damage, such as a cracked window.

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Where You Live & Drive

Do you live in a heavily populated area with lots of traffic and crime? If so, you could be paying more for auto coverage. Insurers see busy streets as an opportunity for more wrecks. And if crime is high, they could be worried about break-ins, theft, and vandalism. The number of miles you drive could also impact your rate. Why? When you drive more, youre more likely to have a chance of being involved in an accident.

A History Of Convictions Or Surcharges

Traffic violations, such as driving under the influence and speeding, may prompt your insurer to increase your auto insurance premium. Following a crash, the provider may also raise your rate if you were 50% or more responsible for the accident. The insurer may also apply a price increase for a history of late payments.

Carriers refer to these types of increases as “surcharges.” The increase may remain until you prove that youre a good driver. The surcharge amount and the length of time you must pay it will depend on the severity of the incident.

What you can do: Improve your driving skills following an at-fault accident. Avoid accidents. Also, consider adding accident forgiveness to your coverage.

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Your Car Insurance Went Up Because Your Credit Score Went Down

Its also possible that your car insurance rates went up because your credit score went down over the last year.

Many companies look at credit scores when calculating car insurance rates. They cant do this in California, Hawaii or Massachusetts, which have banned the practice. But theyre free to do so in every other state.

Thats a big deal, as your credit score can do more to raise your car insurance premium than other rate factors, like your driving record. According to Consumer Reports, a poor credit score could add $1,301 a year to your premium payments, on average. Compare this to the $233 that could be added to your average yearly premium if you have a clean driving record and a good credit score. Or the $122 per year that could be added to your premium after a single moving violation.

Something to keep in mind: auto insurance companies dont have to tell you if they use your credit score to determine your premium.

So, if you live somewhere other than California, Hawaii or Massachusetts, you should assume insurers will look at your credit score while coming up with your rates. And you should shop around and get quotes from other companies if your car insurance goes up at renewal time. The increase could be due to your credit score.

Why Did My Car Insurance Go Up When I Moved

The area where you live is an important factor in your car insurance rate, which is why moving affects how much you pay. Insurance companies consider your area’s crime rates, local laws, population density, collision statistics and even the frequency of extreme weather to determine how much to charge for car insurance.

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Car Insurance And Company Policy

Some of the reasons why car insurance goes up are beyond your control, and that includes company policies. Insurers may have ways of coping with the economic times, and one thing that they can do is increase their rates.

Depending on location, insurance companies can have the freedom to increase their rates as they deem necessary. In some states, the changes can already take effect even when the policy is still in review.

Among others, one thing that can compel insurance companies to change their policies is when there is a need to increase their claims reserves. They might do so to have enough financial resources to settle unexpected claims. They can choose to have high-risk investments to improve their finances. Alternatively, they can also pass the cost to their customers by raising rates so they will have more reserve funds.

Does Your Car Insurance Go Up When You Get A Ticket

Good news: Being issued a ticket by a law enforcement officer doesnt necessarily result in a premium increase. A premium increase will depend on how your insurance company views various traffic violations. Your insurer will weigh a variety of factors. For instance, how serious is the situation? If you were flagged for a minor infraction like failing to yield the right of way or driving with a broken headlight, you might avoid a rate increase. But if you were speeding at 85 mph in a school zone you may see your insurance costs go up!

Bad news: If youre slapped with a ticket for a serious violation like drunk driving, your premium might go up upon policy renewal, since your insurer may consider you to be a high-risk driver. The same is generally true if you get three traffic tickets within a three- to five-year period.

The best defense against a ticket-related increase in your car insurance is to obey all traffic laws when you hit the road. Some insurers reward safe drivers with discounts and savings!

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The Coverage You Select

Did you choose minimum liability coverage? Are you required to carry comprehensive coverage and collision coverage by your lender? The amounts of coverage and types of coverage you choose heavily influence your rates. As you increase your level of protection, the more you can typically expect to pay.

Statistics Where You Live

Insurance companies take factors beyond your car and personal driving habits account when determining your rate. For instance, the following factors can cause your insurance bill to go up for seemingly no reason at all:

• Increased accidentsoften from distracted drivers
• More uninsured and underinsured drivers on the road
• Insurance fraud
• Increased natural disasters

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How Much Will My Insurance Go Up

The amount that your car insurance will go up depends on the reason for the increase. For example, we found that having a violation on your record increases your car insurance rates by an average of 42%. Adding a new driver, especially a teenage one, can raise your rates by an average of 97%.

If you stayed a safe driver for the year and didnt make any changes to your policy and still got a notice that your rates are going up, its probably because of causes that affect the entire industry. In that case, its hard to predict exactly how much the increase will be.

Your car insurance company should send you a notice before its time to renew your policy, and theyll let you know if your rates are going up . If the increase is more than you want to pay, it may be time to shop around for a new policy. .

There’s An Increase In Uninsured Drivers

If you’re involved in an accident with an uninsured driver, your insurance company will pay for your medical bills and damage to your car, if you have the correct coverage. While an uninsured motorist claim won’t usually raise your insurance rates, more uninsured drivers mean accidents are more expensive for insurance companies, which raises rates.

The number of uninsured drivers only increased by 1.2% between 2015 and 2019, according to the Insurance Research Council. However, some states had a greater increase than others. The number of uninsured drivers grew by nearly 7% in Washington, and drivers in the state probably saw an increase in the cost of uninsured motorist coverage. On the other hand, Michigan had a 10% decrease in uninsured motorists, which could result in cheaper car insurance for drivers there.

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How You Can Reduce Your Premiums

While you wont be able to influence factors like inflation or the cost of living, there are other ways you may be able to reduce your car insurance premiums, including:

Always consider your circumstances when making choices related to your car insurance, as what may work for some may not be ideal for others. You can view the full details of any policy in the relevant Product Disclosure Statement before you buy.

You Moved To A New State City Or Zip Code

Your location plays a big role in your rates because insurers consider things like the crash data, crime rate, weather events and claims filed in your area when determining your rate. That’s why moving to another state, city or even ZIP code could cause your car insurance costs to go up.

Drivers living in densely populated metropolitan cities tend to pay more for car insurance their rates are 40% higher than their state average.

That’s because more cars on the road usually mean more accidents. Crime rates are generally higher in cities, too.

Car insurance rates can vary significantly from state to state, as well. The most expensive state, Michigan, has higher minimum insurance requirements than other states, making it more costly for insurers to provide coverage. Drivers in Michigan pay $6,110 more for car insurance per year than those living in Maine, the cheapest state.

States ranked by car insurance cost

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Adding Drivers And Cars

If you add a car onto your policy or replace an existing car with a newer one, your insurance premium may go up if your new vehicle costs more to replace or repair than your old car.

Adding other drivers, newly licensed driver, and drivers under 25 years of age to your existing insurance policy may also cause your insurance premium to increase. Each driver’s premium is based on their years licensed and driving experience.

Economic Changes Affect Car Insurance

Inflation is one of the most common topics in todays news headlines. It can impact many aspects of our lives, including car insurance. It could translate to rising repair and medical costs, which can also drive your premiums up.

Economic changes can result in global chain problems. This could mean difficulty in accessing computerized parts and other components of a vehicle. Additionally, it can result in higher labor costs. Not to mention, labor shortage can also contribute to the problem.

Supply chain disruptions can make it difficult for repair companies to keep up with the demand. It might mean that the parts are harder to obtain. All these things are potential culprits for insurers changing their car insurance rates.

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