People Are Driving More
Accidents can drive up your premium rate even if youve never been in one yourself. Economic growth, urban sprawl and low gas prices have people driving more than ever, according to the Federal Highway Administration.
And even overall good news can be bad news for your rates. As the economy improves, people drive more miles, Lynch says. The previously unemployed are driving to work, and everyone drives more discretionary miles. This puts more cars on the road at any given time, which increases the chance of an accident.
Lower gas prices may also encourage more frequent driving. The more driving, the more accidents, the more claims and the more rates can go up across the board.
How Does Car Insurance Work
Insurance, by its very nature, spreads the risk around a large group of people. At a basic level, each person pays their premiums and transfers the risk of loss on their assets, in this case, a car, to an insurance company.
The insurance company takes the payment but also promises to pay for covered losses to any of their clients.
Insurance companies are able to project the number of losses they will have in any given year with a pretty good degree of accuracy. They use software that looks at historical data on the number of losses they have, as well as the amounts of claims money paid outs.
The companies then use this data to determine their premium rates.
Insurance companies are for-profit businesses, but they are also heavily regulated by each states department of insurance. This means that while their goal is to make money, they also have a lot of oversight and have to be fair to their customers.
Will An Improved Driving Record Affect Your Auto Insurance
One of the simplest ways to control your insurance rates is to manage your driving habits. If you drive safely and avoid accidents, you can positively influence your driving record this can affect your rates on a long-term basis.
Lets look at how much just one accident or speeding ticket can damage your auto insurance rates.
Average Annual Auto Insurance Rates by Driving Record
Bad driving habits can cost you hundreds of dollars in auto insurance increases, not to mention any fines you may be facing.
If someone hits my car, does my insurance go up? Thankfully, your auto insurance will not increase if someone hits your car and you are not at fault in the accident.
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Opt For A Higher Deductible
Changing up your deductible is another way to a lower premium. Your deductible is the out-of-pocket expense you pay before your insurance pays out during the claims process. While a low deductible means youll pay less when you file a claim, raising your deductible can save you money if you have the financial means to cover unexpected bills. Keep in mind youll also get a smaller payout on your vehicle if its totaled and you have a high car insurance deductible.
Why Do My Auto Insurance Rates Keep Going Up
Why do my auto insurance rates keep going up even though my car is getting older? At My Florida Insurance, many of our clients ask this question so I would like to address it from a couple of angles.
First things first, even though its called car/auto insurance, it covers more than just your car. It should technically be called auto-owners insurance, similarly to how home insurance is actually called home owners insurance.
Its important to understand that there are a lot of variables that go into insurance premiums, and with auto insurance, its no different.
The insurance company is much more concerned with you crashing into someone and causing them bodily harm, or death, than they are about your car. A car is a material possession which can be replaced.
A human life is not.
When is the last time you looked at your auto insurance policy?
If you look at it youll notice there are a lot of different coverages on your auto policy.
- Bodily injury
- Loss of use
- Rental Reimbursement
These are all things that you are covered for on your auto policy. How many of them have to do with your car?
How many of them have a price next to them on your policy?
All of them.
Your car isnt the only thing youre being charged for on your policyThats because auto insurance covers far more important things than your car as mentioned above.
Let me re-phrase that: your car insurance rate isnt just based on your car.
Thats what insurance is though sharing in the cost.
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Moving To A New Address
Your postal code is an important factor in determining your car insurance premiums. So, when you move to another address it could affect your premiums. If you move from a busy city to a safer remote area with less traffic that could benefit you and your premiums could reduce at renewal. However, if you move to an area with too many intersections, collisions, traffic congestion etc. then you could see an increase at renewal. More population and areas prone to car theft are on the radar for insurance companies. They calculate more risk for such areas and if you move there that would increase your premiums during renewal.
How Do Operating Costs Affect Your Auto Insurance
Why are my Allstate rates increasing? Why did my auto insurance go up with Progressive, State Farm, or another large company?
One of the largest factors is the cost of operating an insurance company, which continues to increase as more insurance policies are issued, more claims are filed, and more employees are needed to manage the workload.
The insurance providers have to charge enough in rates to manage their business while paying out all valid claims.
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Do Auto Insurance Rates Increase With Age
Demographics are also something out of your control. Some companies charge you more based on your age and gender, although some states like California have outlawed that practice.
How much will my insurance go up as I age?
Lets look at just how much your age and gender will affect your auto insurance rates.
Average Annual Auto Insurance Rates by Age and Gender
Young males pay the most, while older females pay less.
One thing that you can control is the vehicle that you drive. The age and type of vehicle you drive can play a role in your auto insurance rates. Generally, newer cars will cost more to insure.
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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Why Your Car Insurance Went Up After Renewal
Even drivers with a clean record might see an increase in their insurance renewal price. As mentioned above, auto rate increases are sometimes based on factors out of your control, such as claims in your zip code. Or, if youve added a new driver or vehicle to your policy, your rate could also increase at renewal time.
Why Is My Car Insurance Going Up
After a New York car accident, there are many things to consider. One thing that may be on your mind is if there will be a hike in your car insurance rate. In many instances, it wont as there are restrictions on when insurance companies can raise rates. In New York, if your collision resulted in a claim to your comprehensive coverage, the damage was low, nobody was harmed, and there were no fatalities, there will be no increase. But, in severe crashes, these limitations are not in place.
Talk to a Long Island personal injury lawyer to fully understand your financial options after a car wreck. Settlement offers and the impact the accident will have on your finances moving forward need to be considered. Insurance companies do not like risk, maintaining a clean record for the best rates.
Insurance Companies Consider Your Age, Location, and Record
There are other factors, beyond your driving history, that are considered when an insurance company is determining your rate. Often younger drivers pay a higher rate because they are statistically more likely to be infused in a collision. A younger driver is typically one aged 15-25. For example, a driver who turns 25 may find their rate is reduced after that birthday.
Conversely, when a driver is aged 70 or older, they may experience a rate increase. This is because auto insurance company analysis has illustrated that older drivers have slower reaction times, which can lead to more collisions.
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Why Are Insurance Companies Raising Rates
At its most basic form, the premise of insurance is sharing risk and shouldering costs with others. Although your individual circumstances or driving behaviors may not have changed, all of us are impacted by the following:
- Worsening traffic. Increased population, higher employment rates, and lower gas prices led to vehicles travelling 653 billion miles on Washingtons roadways in 2015, an all-time high. According to the Washington State Department of Transportation, freeway congestion in central Puget Sound also increased by 35.7% from 2013 to 2015. When more cars are on the road, the frequency of accidents inevitably increases.
- Distracted driving. Its no secret drivers do dangerous things behind the wheel. Talking and texting on cell phones, using in-vehicle technologies like navigation systems, and eating and drinking all take a drivers attention off the road. A newly released survey by the Washington Traffic Safety Commission shows distracted driving deaths in Washington are up 32%. Nationwide, every day more than nine people are killed and 1,153 injured in crashed that are reported to involve a distracted driver .
- More claims. Statistics from the Insurance Research Council point to increasing frequency and severity of auto insurance claims. From 2005 to 2013, the average cost per bodily injury liability claim increased by a whopping 32.1%.
More Drivers On The Road
The most evident reason why more accidents are happening is due to people driving more. This can be because of low gas prices, economic growth, or even urban sprawl. Insurance experts around the world also claim that people are driving more miles thanks to the improving economies. Even those who are unemployed can comfortably drive now. In short, more driving can mean more accidents and more rates across the board.
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Why Is Car Insurance So Expensive
The price you pay for coverage, known as a car insurance premium, can fluctuate for several reasons. An insurer will reassess your policy when its time to renew and may give you a higher rate based on your driving habits, if you had to file a claim, or an external factor like an uptick in local crime.
Keep in mind its not always one single thing that can cause the price of a car insurance premium to shift. Below, we describe the industry- and personal-related factors that may play into why car insurance is so expensive for you.
Car Insurance Companies Typically Look Back 3
How do insurance companies find out about tickets?
It is most common for insurance companies to look at a five or three-year history to determine your rate, though this depends on the type of auto insurance company you choose. When youre shopping around, look for car insurance companies that only look back three years.
The best way to avoid rate increases is to drive safely and keep financially fit.
Your policy cannot be canceled mid-term based on the information in these reports, but you can certainly expect to be non-renewed or charged more on your next policy term.
This type of rate increase is associated with liability-only car insurance.
The type of car you choose to drive may also increase your insurance rate. If you purchase a newer or more expensive vehicle, be sure to factor in an insurance rate increase into your budget.
We also tend to file more claims to repair newer or more expensive vehicles. More insurance claims always equal higher insurance rates. This type of increase is associated with physical damage coverage.
Also under our control is the amount of liability coverage we elect to receive almost every state has mandatory minimum automobile insurance liability limits. But we have the option to increase that amount, which will certainly make your car insurance rate go up.
You also set the deductible for physical damage coverage if you decrease your deductible, you can expect to pay more for your auto insurance.
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Our Recommendations For Car Insurance
Comparing insurance providers is a great way to find the best rate on auto insurance coverage. Our team of insurance specialists has reviewed the country’s top insurers and found that USAA and Geico are two excellent options due to their competitive prices. Read on to learn more about them, or enter your zip code below to start comparing free quotes from providers in your area.
How Mcclain Insurance Can Help
Rest assured the McClain Insurance team is here to help. As independent insurance agents, we represent the Pacific Northwests best insurance companies, including PEMCO, Safeco, Travelers, and Progressive.
We can advise you on your insurance options and ensure youre still receiving the combination of value and protection that is right for your family.
Not a McClain Insurance client yet? to request an insurance review by one of our agents, or call text our office at 379-9200.
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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.
Minor Traffic Violations Include:
- Attempted felonies
In case you are charged with any of these offenses and you win the case, your driving record will not be affected. And to avoid paying more due to basic traffic violations, you can enroll in a professional driving class. Another smart way is by getting a minor violations forgiveness, which operates under the one driver one violation rule.
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Why Is My Car Insurance So High
When it comes to car insurance, you can generally group the reasons for high prices into two boxes there are the things you can control, and the things you cant. For now, well focus on the things you cant control but well come onto a list of things that you can do to drop your insurance costs soon.
Statistics make the car insurance world go round and if youre on the wrong side of those statistics, youre likely to find that your premiums are higher than average. These are often things you cant easily control such as:
- Your age
- Your postcode
- Accident and theft rates locally
- Past accidents and convictions
Car insurance providers get their prices based on how likely they are to have to payout at some point during your policy. Clearly, they dont have a crystal ball that lets them look into the future so the facts weve listed here give the company a good indication of how likely you are to be involved in an accident.
It might seem like a guilty until proven innocent approach to insurance but unfortunately, thats the way insurance works. This means that premiums can be especially high for people who are young, people who have previous driving convictions, and people who live in areas that see a lot of accidents and car thefts.
Car Insurance Sees Biggest Price Drop In Six Years
British motorists are facing the biggest drop in car insurance costs in almost six years, a price comparison website has found.
Confused.com says the average cost of car insurance has fallen by Â£87 in 12 months due to lower risk of accidents.
This comes as average mileage dropped by 43% during the pandemic as driving habits changed.
The cost of insurance for men fell by Â£91, a 14% fall year-on-year, while female drivers are saving Â£82.
Confused.com’s latest Car Insurance Price Index, in partnership with global insurance broker Willis Towers Watson, tracked six million insurance quotes during the first quarter of 2021.
The data showed motorists in the UK can now expect to pay an average of Â£538 on car insurance for the next year.
Yet if you’ve received your car insurance renewal in the last three months, you might have seen your insurance premium go up by an average of Â£45 – an amount derived from the insurance quotes tracked.
The price comparison site says this shows motorists are likely to pay more if they opt to stick with their current insurer.
Consumer group Which? says that while it is good news that prices are coming down, this doesn’t necessarily mean that you are guaranteed to get a price reduction on your car insurance quote.
“It might be an option but it really depends on where you are in your contract and whether it’s cost effective to switch,” said Mr Shaw.
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