Why Did My Auto Insurance Rates Increase?
Auto insurance is a true Catch-22. After all, no one likes to fork over money and see it disappear each month, but even worse is the thought of being uninsured when you really need it. And while car insurance is already expensive enough, many of us see our rates increase over time—even if we’re good drivers with a squeaky clean record and no claim history. If you are wondering why you’re seeing a sudden spike in your car insurance rate? There are a lot of factors that can cause an increase in a car insurance policy. Stay with us as we take a look at how they may have affected your premium—even if you haven’t submitted a single claim. Here are a few reasons why your car insurance rates could increase:
- Traffic Violations
- Car Type
- Insurance Claim History
- Auto Coverage Lapses
- Personal Credit History
- Current Location
Below we will dive into each of these issues that can cause your car insurance rates to go up and why.
A Spotty Driving Record
Just like your last blind date, an insurance agent will want to know everything about your past—when it comes to your driving record, that is. The more traffic violations you’ve racked up, the higher your insurance rate will climb. When it comes to violations, there are two categories that can affect your premium, including minor and major traffic violations listed out below:
Minor Traffic Violations
- Illegal parking
- Failure to stop or yield
- Running a red light
- Overloading a vehicle
- Following too close
- Improper passing
Major Traffic Violations
- Reckless driving
- Open container
- Wrong-way driving
- Driving on a suspended license
- Driving under the influence
- Fleeing from police
Your Car Type Can Increase Insurance Rates
Between a brand-new Porsche 911 and a Volkswagen station wagon, which car would you rather take for a joy ride down an open road with no speed limits?
If you chose the Porsche, you’re thinking like an insurance agent. See, they know the temptations of a souped-up speedster. Cars like these make it easy to put the pedal to the metal—which means a higher chance of an accident.
It’s not just the smaller, sportier vehicles that cause a higher premium. High-end luxury cars are also more expensive to repair or replace, which means a hike in monthly rates, too. Insurance companies will also be on the lookout for commonly stolen cars. The make and model varies from state to state, but Honda Civics and Ford pickups are among the most highly coveted vehicles by car thieves—and their drivers bear the financial brunt.
Your Car Insurance Claim History
If you were at-fault in a car accident and the other driver files a claim, the payout resulting from that accident will impact your rate. You might be wondering, “but what about small accidents, such as a fender bender?” Fortunately, some insurance companies offer a buffer that affords you a small payout— usually under $500—without needing to pay an increased monthly premium.
Still, in the long run nearly every auto insurance company will raise your insurance price after an accident, and you’ll pay more for accidents that were your fault. These amounts vary among companies, so you might want to speak with your provider and find out what they charge before you’re surprised with a skyrocketing bill.
A Lapse in Your Auto Coverage
A lapse in car insurance means that your car is registered but you don’t have insurance. Let’s say you missed a monthly payment or forgot to renew your policy immediately after it expired. Both are simple mistakes, but they also count as a lapse in insurance, even if that lapse only lasts a single day. Some insurance companies may not penalize you if your lapse is less than two weeks or so. But others may raise your rates—and for good reason. That’s because when you have a lapse in your car insurance, you’re a greater risk to insurers, should you get in an accident.
So just how much of a spike should you expect to see on your bill? Studies show that drivers with a coverage lapse of 30 days or less saw an 8% average car insurance rate increase. On the flip side, drivers who went without insurance for more than a month saw a 35% increase. The lesson here? The longer you wait to renew your policy, the higher you can expect your rate to soar.
Your Credit History
Do you have bad credit? Maybe your score has taken a hit recently? Insurance companies will want to know about your credit history, too, including any debts, bills, tax liens, and personal judgements. That’s because they use ‘insurance scores’ to rate their policies.
The insurance score is a number that reflects your credit, and insurance companies claim that it predicts how risky you are behind the wheel. It’s not that these insurers care about the amount of debt you’ve accumulated, or to who. Instead, they’re trying to find a pattern of delinquency—whether that means taxes you haven’t paid, bills that have piled up, or liens that have been claimed against you. The bottom line is that insurance companies want to reduce their risk, so if you have no credit history to speak of, or if your credit is in poor standing, they’re going to charge you more.
Your Location Also Increase Auto Policy Rates
It may seem unfair, but it’s true: many insurance premiums are dictated by where you live. A number of factors are considered, including weather patterns, the population demographic, and even the history of accidents in the area.
For example, Michigan has the highest insurance rates in the nation, thanks to its no-fault personal injury system that offers unlimited lifetime medical benefits to injured motorists. The Great Lakes State is also home to more uninsured drivers than the national average, which raises the costs for everyone else. Depending on the laws and driver behavior statistics, someone in one state may pay nearly double what someone across the state line pays—as is the case with Montana and Idaho. See different auto insurance rates by state here.
The Most Comprehensive and Affordable Auto Insurance
As you can see, it’s much more than a claim history that can affect your monthly insurance rate. Fortunately, once you understand what causes these increases, you’re able to find a provider that will give you the best rates possible. And we’re here to make the hunt for auto coverage easier than ever with our fast and affordable online auto insurance quotes. Get your quote today and find out how much you can save every month!