If you haven’t had an accident, haven’t had any tickets, haven’t moved or changed much of anything, then why did your insurance rate go up? The answer lies in understanding how car insurance companies set their rates.
The details are complicated but understanding the big picture of auto insurance rate setting may help you feel better about that rate increase.
I Haven’t Had Any Accidents and My Rate is Rising
Insurance is a business that is all about risk. The nature of risk is that sometimes you win and sometimes you lose, and auto insurance companies are all about winning. In their case, this means taking in more money in premiums than they are paying out in claims.
It’s a little bit of a one-sided relationship between you and your insurance company though. If they lose, you generally lose a little bit too—in the form of higher rates. Essentially, if the insurance company loses money, nearly every customer, even those with a clean and clear driving record, will see a hike in premiums.
Another reason that you might see your auto insurance rate go up is due to a change in your neighborhood. For instance, if there is a sudden uptick in the number of collisions or thefts in your area everyone in the vicinity may see their rates rise.
How is My Insurance Company Losing Money?
Natural disasters and severe weather, both of which are on the rise in recent years, can contribute to higher than expected payouts by insurance companies. Even if you don’t live an area that has seen higher than normal rates of flooding or hurricane damage, the effects of these billion dollar disasters are felt by everyone.
Why Your Rate Might Keep Rising
Car insurance rates are always fluctuating based on many conditions and factors. But, you can likely expect that you will be paying more in the future for the type of coverage you have now. This is because of several factors that are generally contributing to more incidents and payouts by insurers.
Distracted driving, especially due to texting while driving, is causing more accidents. In addition, lower gas prices lead to more people on the road, which inevitably leads to more accidents.
Shop Around Regularly to Keep Saving
The best way to keep your own insurance premium payouts in check is to shop around to make sure you are paying the lowest rate. Most policies these days run for six months. So, when it’s time to renew it would be wise to take a few minutes and obtain quotes from several carriers and potentially find some savings.
If you’re not happy with an increase to your insurance premiums, through no fault of your own, use the InsuranceWins form to get quotes from other carriers and you may just find a better rate.