Everyone who has any type of insurance policy has a renewal date, and these renewal dates are when rates with insurance companies can change. When people ask, “Why did my auto insurance rate go up?” there are a variety of reasons why, with the most common ones discussed below.
The first (and most likely) reason for any large increase in auto rates is changes to an individual’s driving record. Insurance companies base your rate on previous tickets or accidents generally within the past 3-5 years depending on the insurance company and nature of the incident.
Another consideration is a change in credit. Your credit history impacts the billing plans that are available to you and is used to forecast if you are likely to pay your premiums.
Changes in coverages are another common reason. This may be due to state regulation changes, additions of drivers, and/or changes in vehicles. All these changes impact your rate.
Rate changes may be a reflection of the losses in your area, too. Every zip code and area have different insurance rates based on past claims. If your area has an increase in claims, or if you move to a new area that has many claims, both can cause an increase in your rates. This is due to the costs of claims/vehicles with large claim payout costs being absorbed through an increase in the rates of everyone else. We often hear clients say this is unfair, but it all comes down to statistics.
One final thing to note is that the cost of repairs is up. This is due to a shortage of parts and increased labor costs. Both things impact your rate.
Discussing your renewals with your agent and reviewing all potential other options are the value of an independent agency with numerous carriers. Rate changes can often be addressed through a review or a rewrite of coverage. Many companies do offer discounts for new vehicles or good student discounts for younger drivers to assist in these increases, so always be sure to inquire during a review. When you receive your renewal paperwork (generally a month before your renewal), it is a great time to reach out to your agent for a review.