Many people are experiencing a spike in their car insurance rates. This can be frustrating and overwhelming. But what can they do to lower their rate?
Several factors can cause your car insurance rates to increase. Some of these include increased inflation, claims, and reinsurance costs.
Increased Claims
Often, premiums increase because the insurance company’s expenses for paying claims have increased or their risk exposure has increased. Inflation rising across the economy is a common reason for rate increases.
Other reasons for insurance rate increases include:
- At-fault accidents.
- Traffic violations.
- A change in vehicle.
- Moving to a different area.
- Losing certain discounts.
The vehicle you drive also greatly impacts rates, with higher-value vehicles and sports cars costing more to insure.
Age also impacts auto insurance rates, with young drivers paying more due to their perceived risk of accidents. However, as people reach their 50s, their rates start decreasing again.
Increased Inflation
Inflation has caused many prices to rise in the last year, including gasoline and food. However, car insurance is one of the few that has seen an even steeper rise. This is due to several factors, most notably increased claims and rising labor costs.
Labor is a large portion of car repair costs, which are then passed on to the insurance companies. In addition, the COVID-19 pandemic has caused shortages and hampered shipping lines, which has resulted in higher pricing on parts and materials.
As a result, insurers must increase their rates to cover these expenses. This is especially true in states like Florida experiencing extreme weather events. The reinsurance cost is also increasing, passed on to the drivers in those states. The good news is that these rates may only stay high for a while. Here are some things you can do to help keep your car insurance rates down.
Increased Traffic Violations
When your car insurance rates increase at renewal, it is usually because of a change to your driver profile. Insurance providers review your state driving record to see if you have any new tickets, accidents, or DUIs. Insurance companies assume drivers with tarnished records are more likely to be involved in accidents and file car claims, so they charge higher premiums for these drivers. Non-moving violations like parking tickets or a broken tail light citation do not typically raise insurance rates. However, moving violations like speeding and DUIs can significantly increase your rate.
Some states penalize drivers differently for violations, so shopping around is important after a traffic violation. Minor tickets also have different penalties, so you should consider fighting your ticket.
Increased Insurance Company Risk
Several factors affect car insurance rates within and outside a policyholder’s control. A person’s age, gender, and driving history are all rating factors that can greatly impact their rate. Other rates may be affected by state laws, weather, and vehicle repair costs.
When these cost factors rise, insurance companies have to raise their rates accordingly to make a profit and continue offering affordable coverage. Without raising their rates, car insurance companies could run out of money and be unable to pay claims.
Other reasons for higher rates include:
- Changing credit scores.
- Moving to a different location.
- Purchasing a more expensive vehicle.
Some of these changes are completely in the client’s control, such as avoiding accidents and traffic violations. Others are not, such as the recent natural disasters that have affected many regions nationwide. These disasters drive up insurance rates because they cause increased damage to vehicles and medical bills for the injured.
