Why Do My Auto Insurance Rates Go Up?
Last Updated on November 24, 2020
Over time, auto insurance rates tend to rise. It’s inevitable. Some rate changes you have absolutely no control of, while some, on the other hand, are completely on you. Why do insurance rates go up? Why did your insurance go up for no reason? Below, we’re answering every question you may have as we take a look at some of the things that may cause your insurance premiums to increase.
List of reasons for car insurance rate increases (click to skip ahead):
- Changes in local laws
- Credit score issues
- New driver or car added
- Change in address
- Speeding tickets
- Reckless driving citations
- DUI convictions
- Other moving violations
- Changes in the local cost of living
- More traffic accidents on local roads
- Higher rates of distracted drivers
- Higher rates of uninsured drivers
- Higher speed limits
- Higher rates of insurance fraud
- Extreme weather or natural disasters
- Higher rates of vehicle theft
- Cancellation of related policy
It’s OK to get into an accident every once in a while, especially if the accident is not your fault. Most insurance companies understand this and will not raise your premiums based on an accident you are ruled to be not at fault in. In fact, many insurance companies have “accident forgiveness” programs where they will even “forgive” you for your first accident even if it was your fault.
It’s when you make too many claims over a short period of time that really raises a red flag with the insurance companies. If you are ruled to be not-at-fault in these accidents, the insurance companies will tend to be more lenient with your rate changes. If you are ruled to be at-fault, you can definitely expect your insurance premiums to rise.
Changes in Local Laws
Many states, like New York, have laws regulating the insurance industry. These laws impose limits on how much car insurance companies can charge for premiums. These are put in place to protect the consumer from outrageous insurance bills.
Sometimes, however, legislation may get passes and these laws may change. Because of this, through no fault of your own, you might get stuck paying higher insurance rates.
Credit Score Issues
Auto insurance companies do look at your credit score when determining your premiums. If your score drops, you might see your insurance bill reflect your new credit standing. The reason insurance companies look at your credit score when determining your rates is because it gives them a good idea of how trustworthy and reliable you will be when it comes to paying your bills on time, filing claims, etc. To be viewed in a more positive light by insurance companies, always keep your credit score high.
New Driver or Car Added
If you are part of a family and add your children or other family members to your policy, your premiums might increase. This is especially true if the new drivers added to your policy are deemed to be “high risk.” High-risk drivers are usually one or more of the following – young, inexperienced, elderly, and/or have a bad driving record.
The same is true if you happen to add a new car to your policy. Make sure the vehicle has a solid vehicle history report as well as a high safety rating. Luxury cars, sports cars, and cars expensive to repair will always cost more to insure and therefore will result in an increase in your insurance rates.
Change in Address
Rural areas tend to have lower insurance rates than urban areas. There are many reasons for this, but the most notable ones are – less congestion, cleaner roads, and less crime/vandalism. If you recently moved from Queens to Long Island, for example, expect your insurance to drop. If you moved from Rochester to Manhattan, on the other hand, expect an increase.
Many insurance companies ignore a single speeding ticket if you have an otherwise clean record. However, if it’s a serious speeding violation (say, if you were caught speeding more than 20mph over the limit), or if you have multiple speeding tickets on your record, then your auto insurance rates could go up.
Reckless Driving Citations
Reckless driving is a serious offense. It’s also directly correlated to auto insurance risk. If you were convicted of reckless driving, then your insurance company could raise rates significantly – even if it’s your first reckless driving conviction on an otherwise clean record.
If you were caught driving while intoxication (DWI) or driving under the influence (DUI), then your insurance company will immediately raise your rates. Depending on your state and your insurance company, your rates could increase by 40% to 80% after your first DUI conviction. If this is your second DUI conviction or more, then your insurance premiums could rise even higher. DUI convictions are associated with a much higher risk of an accident or claim, and insurance companies raise rates significantly to cover this added risk.
Other Moving Violations
Other moving violations within your car insurance lookback period could raise insurance premiums. Any speeding tickets, reckless driving citations, DUIs, or moving violations within a 3 to 10 year period could raise rates, depending on your state and insurance company. A moving violation is any violation that occurred while you were driving your vehicle. A non-moving violation (like a parking ticket) is unlikely to raise car insurance premiums.
Changes in Local Cost of Living
If the cost of living has recently increased in your area, then your insurance company will raise rates to cover this added cost. Your insurance company is affected by two major aspects of the local cost of living, including:
- Higher Auto Repair Costs: Insurance companies cover the cost of repairing your vehicle after an accident. If the local cost of living has recently increased, then car repair businesses raise prices, causing car insurance companies to raise premiums.
- Higher Medical Bills: The cost of healthcare has risen dramatically in the United States over the last decade, and it will likely continue rising in the near future. Insurers must cover medical bills for injured drivers after accidents, and car insurance companies regularly raise rates to cover the growing cost of medical care.
More Traffic or Accidents on Local Roads
Some population centers in the United States are growing quickly, and that means more traffic on local roads. More traffic means more density, and more density means more accidents. If your area’s population has risen dramatically in recent years, then there may be more accidents than ever, and car insurance companies will raise rates to cover this added cost.
Higher Rates of Distracted Drivers
Some areas of higher rates of distracted drivers than others. Texting, and other types of phone use while driving, have created more distracted drivers than ever. Regions with high rates of distracted driving tend to have higher accident rates. A distracted driver is a bad driver. If your region has poor distracted driving laws or enforcement, then you might have a relatively high rate of distracted drivers, which means higher insurance premiums.
Higher Rates of Uninsured Drivers
In some states, nearly 1 in 4 drivers are uninsured. Uninsured drivers are a nightmare for insurance companies. If an uninsured driver causes an accident, then insurance companies may still have to pay – but they receive no compensation from the at-fault party. Insurance companies pass these costs onto drivers. Nationwide, approximately 1 in 7 drivers are uninsured. Depending on your state, anywhere from 5% to 25% of drivers may be uninsured.
Higher Speed Limits
Certain regions have higher speed limits than others. In the United States, higher speed limits are often correlated with higher accident rates. If your area has recently increased speed limits, then insurers could raise premiums to cover the added risk.
Higher Rates of Insurance Fraud
Insurance fraud costs insurers billions every year. Some drivers invent claims. They claim they were involved in a hit and run, for example, when they really smashed into their garage when pulling into their house. If insurance fraud cases have spiked in your area, then insurers could raise premiums to cover the high cost of insurance fraud.
Extreme Weather or Natural Disasters
Major, regional disasters are a nightmare for insurance companies. A single flood, hurricane, forest fire, hail storm, or other weather events could cause billions of dollars of damage – and insurance companies may be required to cover every dollar. If your region is more prone to natural disasters or extreme weather, or if you have been hit by multiple severe weather events in recent years, then you may see higher insurance premiums in the near future.
Higher Rates of Vehicle Theft
Maybe you used to live in a nice neighborhood, but crime has increased in recent years. If vehicle-related crimes have spiked in your area in recent years, then your insurance company could raise premiums to cover the added cost. Insurance companies are required to cover vehicle theft, vandalism, break-ins, and other damages on full coverage policies.
Cancellation of Related Policy
Maybe you recently got divorced. Your partner’s policy is no longer bundled on your policy, causing your premiums to rise because you lost your multi-vehicle or multi-policy discount. Or, maybe you dropped homeowner’s insurance, boat insurance, RV insurance, or any other policy bundled with your car insurance, causing you to lose your bundling discount. Cancellation of a related policy could increase car insurance premiums.
Final Word on Why Your Insurance Rates Increase
Remember, if your insurance company continues to raise your rates, you are always free to seek out a new provider. Once your policy expires, you are not contractually obligated to continue purchasing insurance from that same company.
Consider comparing rates from other auto insurance companies to make sure you are not paying more than you need to. To start your comparison, scroll up to the top of this page and enter your zip code. After filling out our brief two-page form, you will be given multiple quotes from the most trusted insurance companies.