Are you tired of seeing higher car insurance premiums at every renewal? You aren’t alone. Even if you have a great driving record and had no claims, you may find higher premiums at renewal. Sometimes, though, drivers are able to get lower premiums. It depends on a variety of factors. Keep reading to learn why this happens.Get today’s insurance rates.
It May Have Nothing to do With You
Insurance companies use algorithms to calculate your risk level. These algorithms take into account national averages. They look at people the same age as you driving the same type of car. How likely are these people to be involved in a car accident? If those rates are high, you can expect your premiums to increase even if you didn’t have a claim.
Insurance companies take a risk insuring you. If you have a large claim, such as if you total your car, the insurance company may lose money on you that year. If they have a lot of clients just like you, it puts the financial integrity of the insurance company at risk.
On the other hand, if the people within your demographic have a long accident-free period, your premiums may decrease. How often your premiums increase or decrease depends on how often your insurance company runs the calculations.Shop and compare insurance quotes.
What’s Business Like?
Supply and demand also play a role. If the market is saturated with insurance companies and each one must compete for your business, you may find lower premiums. Insurance companies know if they increase your premiums too much that you can just hop over to the agency down the street.
On the other hand, if the competition isn’t fierce, insurance companies may not be as willing to offer lower premiums. You have to carry car insurance – it’s the law. If it’s not as easy for you to shop around, you may find that your premiums increase over time.
Your Factors Changed
Aside from the market and factors you can’t control, you also play a role in how much your insurance changes:
- You changed locations – Where you live plays a role in your insurance costs. Some areas have higher rates of theft and accidents. If you live in one of them, you’ll pay higher premiums and vice versa.
- You had a claim – If you were involved in an accident (you were at fault), your car was stolen, or your car had weather damage, your premiums may increase. Your risk of filing another claim in the future increases, and insurance companies must protect themselves.
- You have driving violations – Even one moving violation can create higher premiums. If you have more than one, you run the risk of losing your insurance, so use caution when driving.
- You changed drivers or cars – Insurance companies set your premiums based on the drivers and the cars you insure. If you get a new car, add or remove a driver, it could affect your premiums one way or the other. For example, adding a teen driver will likely increase your premiums.
- You removed a policy – Insurance companies give discounts when you have more than one policy with them. If you cancel a policy, you may lose that discount, which will make your premium increase.
The Insurance Company May be in Trouble
Finally, insurance companies may increase your rates because they, themselves are in trouble. If an insurance company had a large number of claims in a year, they may need to increase premiums across the board in order to stay profitable. Remember that every time an insurance company pays a claim, they lose money. They have to figure out a way to recoup it. If the charged premiums for the year weren’t enough to cover it, they may need to increase premiums for the following year to make up for it.
Check your insurance documents before every renewal period. If your premiums increased, ask your insurance agent why they increased. Sometimes little tweaks, such as changing lowering coverage for your aging vehicle can get you back where you need to be. If not, you always have the option to shop around and change insurance providers, even if you are in the middle of a policy’s term.Get the right insurance coverage.