If the price you pay for car insurance goes up every year, or even every six months, you’re not alone. Even when you haven’t made any claims or recorded any traffic violations, there’s a good chance you’ll see at least a slight increase each year. So why do auto insurance premiums go up every year?
Even seemingly small changes in some of your individual risk factors can potentially result in a higher premium. But as you may have guessed, it’s not always your individual behavior that causes your premium to rise.
In order to pay claims, insurers must collect, on average, the same amount of premiums they pay for losses and expenses. It is often the case that expenses associated with paying claims have generally increased statewide.
Think of expenses that tend to rise in all parts of the economy, such as health care, wages, and other costs of living. Inflation is another important factor that affects these expenses. These higher expenses are offset by increases in premiums that affect most drivers, if not all.
reasons for premium increases
Let’s see the reasons why your car insurance premium can increase over the years. These may include filing a new claim or adding a moving violation to your driving record, adding or changing a vehicle, adding or changing a driver, and increasing your coverage amount. Of course, if you have multiple drivers on your policy, the potential for annual increases multiplies.
add vehicles, drivers and coverage
If you add a vehicle, there is something extra to insure, so your price will increase. Even if you’re just switching from one vehicle to a different make, model, or year, your price may go up if your insurance company thinks the new vehicle itself isn’t as safe or more expensive to repair. Similarly, adding or changing a driver can increase the price you pay.
Finally, if you decide to increase your coverage limits, add optional coverages, or lower your policy’s deductibles, then your price will go up.
driving history: points and accidents
Your driving record indicates how risky it is to insure you. It can consist of traffic violations, accident history, and claim history. Safe driving is important to keep your premium lower and prevent accidents before they happen.
Points reflect your driving record and are often considered by some insurance companies in their rates. While some insurance companies may not use the points directly, violations involving those points will generally result in higher rates.
Learn more about your state’s point system to see what violations could affect your premiums.
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Unsurprisingly, auto accidents will increase your insurance costs. An at-fault accident is likely to increase your premium, but even no-fault accidents can result in a price increase, depending on your company’s rating plan. optional coverage, like our accident forgiveness, may waive surcharges after an accident.
Filing a claim can also increase your premium. how much it increases depends on the type of claim you file. for example, a comprehensive claim will generally result in a smaller increase than a collision claim.
These are statistically associated with greater exposure to risk. Except for very minor claims (usually less than $1,000 depending on your state and insurance company) and minor traffic violations like a broken taillight, any new claim or traffic violation is likely to make you seem riskier.
rate level changes
Another very common reason for a premium increase comes in the form of what is called a rate level increase. rate level increases are often due to trends in the industry toward more expensive vehicle repairs and medical costs.
Repairs and medical costs almost always go up, so overall rate decreases are very rare. At Plymouth Rock Assurance, we do everything we can to keep those costs down on behalf of our customers.
As you can see, there are some obvious and some not-so-obvious reasons why the price of your car insurance goes up every year. Whatever the reason, rest assured that not all insurance companies will charge the same for the same coverage.
That’s why it’s important to shop around for a better price if you think your insurance premium has gone up too much. annual increases are typical across the industry, but how a particular company views its risk factors can vary.
Know your coverage and discounts to make sure you get the best price for the security you need.
Call 855-993-4470, get your free quote online, or find a local agent to see how Plymouth Rock Assurance can help.