Why Does My Car Insurance Keep Going Up?
Even if you’re the most cautious driver with a driving record to envy, you might still be wondering, “Why does my car insurance keep going up?” every time you renew. But you’re hardly alone in this scenario. There are several factors at play to keep your car insurance up. Even worse, some of these issues are out of your control because they affect the global car insurance market.
Although there are some obvious reasons like at-fault accidents, there are also other interesting factors at play. Let’s find out!
Increased Insurance Premium Tax Rates
Sounds familiar? Yes, increased taxes affect everyone, motorists, especially. According to a report by the Telegraph, insurance Premium tax is steadily and quickly growing. The report further adds that insurance premium tax rates are currently at an all-time high of 12pc. Some policies, such as extended warranties and travel cover, even charge as high as 20pc. Don't use plagiarised sources.Get your custom essay just from $11/page
Let’s take the rising medical and spare parts costs, for example. Expensive auto spare parts will not only increase the repairing value but also put you at risk of theft and vandalism. All these factors, when considered, you will undoubtedly pay more premium rates.
Traffic Violations
You don’t need rocket science to know that your auto insurance policy rates will increase if your car is involved in more traffic violations. That aside, there are two distinct types of traffic violations; the minor traffic violations and major traffic violations.
Minor traffic violations include:
- Over speeding
- Following too closely
- Failure to yield
- Improper packing
- Using a mobile phone while driving
- Improper passing
Major traffic violations are:
- Driving under influence
- Driving with a suspended license
- Running from the police
- Drag racing
- Attempted felonies
- Wrong-Way
In case you are charged with any of the 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.
At-fault Accident
An at-fault accident is another primary cause of increased insurance premium costs. What this means is that you’re the one squarely responsible for causing the accident. If you file a claim after an at-fault accident, you’ll likely pay more. Luckily, some insurance service providers allow their customers to make small payouts without an increase. And again, purchasing accident forgiveness is will come in handy here.
Your Car Type
If you’re searching for a new car, things such as comfort, styling, size, and fuel economy are your top priority. But they come at a cost because it’s now a proven myth that your overall car valuation will determine how much you pay for the premium rates.
To begin with, the size of your car will matter a lot when buying auto insurance. Generally, most people think that smaller vehicles such as sedans are more maneuverable and, thus, more likely to cause accidents. This is even backed up by statistics that prove smaller and sportier vehicles are driven at higher speeds and by younger, riskier drivers. So, because these cars are likely to be involved in more accidents, they also become more expensive to insure.
But big car owners are also not spared as well because big motors will attract more significant rates. Big SUVs, sports cars, and trucks are known to have more horsepower. That means your vehicle is likely to move at faster speeds, hence the risk of causing an accident. Therefore, to be safe, shop around for the cheapest insurer. That is, if you can’t get a vehicle with a smaller horsepower.
Bad Weather
Another cause of the “Why does my car insurance keep going up?” problem is extreme weather conditions like floods, hailstorms, etc. The United States, for example, is well-known for the harsh weather conditions in the recent past. The result is millions of dollars getting lost in car damages, which insurance companies end up paying via the comprehensive plan.
According to NOAA, the overall damage caused by floods, tornadoes, and hailstorms is more than $9.5 billion per year. So it’s evident that insurance service providers are indeed paying out. To cover some losses and stay operational, clients will undoubtedly have to pay slightly more.
Uninsured Drivers
Of course, you’re doing it right, getting an auto insurance cover. Sadly, not everyone will stop at nothing to get one. According to a report by the Insurance Research Council, the rate of drivers without this all-important policy increased from 12.3pc in 2010 to 13pc in 2015. Florida boasts of the most significant percentage at a whopping 26.7pc.
The Insurance Research Council even adds that uninsured claims passed the$2 billion as of 2012. The average payment by a single uninsured driver also stands at $20,000. So it’s evident that insurers suffer massive losses when trying to deal with uninsured claims. For the client, it is the policy owner’s responsibility to shoulder the burden. It gets worse because some states demand that all car owners purchase uninsured motorist coverage.
A Low Credit Score
It’s the global tradition for lenders to evaluate your credit score before determining your loan repayment ability. And as it turns out, the trend is now widespread in the auto insurance space. The insurance companies have concluded that clients with low credit scores are more likely to be involved in accidents. Therefore, they charge rates depending on the credit score as well.
Luckily, states like California bar insurance companies from using customer’s credit scores to set the premium rates. Nevertheless, you have one more solid reason to improve your credit score.
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 – more accidents – more rates across the board.
Save Yourself
Even with these factors at play, you shouldn’t pay a dime more on for your car insurance if you’re not comfortable with the numbers. Don’t just accept anything that your auto insurance provider throws your way.
There are several things that you can do. Some of them include opting for liability instead of full coverage, increasing your deductible, and of course, reading the terms carefully. But the wisest thing to do is shopping for a car insurance company with competitive prices and favorable conditions.
Sources:
https://www.policygenius.com/auto-insurance/why-did-my-car-insurance-go-up/
https://www.investopedia.com/insurance/what-causes-your-insurance-premium-go-up/