There are a few reasons that car insurance prices go up every year. The first reason is that the cost of car repairs and replacements continue to rise. Insurance companies must account for these rising costs when they set their premiums. Another reason car insurance rates go up is due to the increasing number of claims being made. As the number of accidents and traffic violations increase, so do the number of claims being filed. This puts upward pressure on premiums. Also, insurance companies must account for inflation when setting rates. As the cost of living goes up, so do the costs of running an insurance company. All of these factors contribute to why car insurance rates tend to increase on an annual basis.
These are some of the most common reasons that insurers give for upping insurance premiums go up every year, however there are also some other reasons that are less discussed that lead to individual increases of insurance. In this blog we unpack these and also discuss some ways in which we can prevent them.
A change in policy details
Changing details on your insurance policy can cause your rates to go up, too. Even if you are simply switching vehicles of one type or another, the prices could rise if the insurance company believes that the new car itself is less safe or will cost more money to repair. An accident in which you are at fault will probably increase your price, but accidents where you are not at fault also may cause a price hike, depending on the pricing plans of your insurer.
Your driving record
While it makes sense for your driving record to impact your auto insurance rate, it might be surprising that these moving violations could raise your life insurance rate as well. Even a small moving violation could raise your car policy costs. Reckless driving, not wearing your seatbelt, jumping a traffic signal, and more could get you in trouble with the law, as well as raise your premium.
Area insurance data
As unfair as it sounds, there are times when your insurance rates increase due to insurance data within your province. Shopping around for cheaper car insurance could save you big bucks, but your rates are never guaranteed. Paying more in claims than expected, rising auto repair costs, or even higher healthcare costs could cause your auto insurer to increase your rates when you renew–but shopping around for more affordable policies could help you find cheaper coverage.
Financial difficulties
Because auto insurance is an essential expense for car owners, the increases in rates can come as a surprise — and a financial challenge, especially for drivers who are already paying higher-than-average rates due to having teenagers covered, having accidents or tickets on their records, or living in a region with higher costs of living. While some premium increases may be due to a general rate hike, others are more specific to you — caused by factors like your driving record, health history, and credit score. If your credit score drops because of increased debt, decreased income, missed or delayed payments, too many credit inquiries, or any number of other reasons, your insurer might decide to raise your premiums in order to hedge.
