Why Did My Auto Insurance Premium Go Up?
Summary: It’s time for your auto insurance policy to renew. However, your insurer is increasing your policy’s premium. What happened? Why did your auto insurance premium increase? Click through to learn why you might be paying more for your coverage.
Most auto insurance policies come with six- or 12-month terms. As long as you keep paying your premium, your insurance policy will automatically renew for another term once you reach the end of your current one.
If your insurer plans to increase your policy premium, it will usually notify you at least one month before your current term expires. If the premium increase is significant, such as a 10% jump or higher, your state may require insurers to provide a written notice explaining the reason behind the increase in your payment.
But why would your insurer boost your premium? Here are some of the most common reasons:
Speeding tickets, DUIs: Insurers reward safe drivers with lower rates. But they also protect themselves by charging riskier drivers higher premiums. If you received a speeding ticket or DUI during your recent term, your insurer will increase your policy’s premium upon renewal. How much your premium jumps depends on your insurer, but you can expect your premium to rise by 20% to 30% if you receive a speeding ticket.
Accidents: Your premium will rise, too, if you file an accident claim during your current term. Again, this comes down to risk. Once you file a claim, insurers believe that you are more likely to file another. They protect themselves by boosting your premium. This can happen even if the accident wasn’t your fault. How much your premium will jump varies, but you can expect to pay from 20% to 50% more after you file an accident claim.
Adding a vehicle: If you add a new vehicle, even if you sell your old one, your policy’s premium might rise. If your new car is more expensive, it will cost more to repair or replace it if it is damaged or destroyed in an accident. Thieves might be more likely to steal a more expensive car. Because of this, your insurer might charge you more to protect it.
Adding a driver: Your premium will jump if you add a new driver to your insurance policy. This is especially true if you add a teen driver. These younger drivers are more likely to get into accidents, making them riskier to insure.
You moved: If you move during your term, your auto insurance might increase upon renewal. Certain neighborhoods or zip codes report higher rates of vandalism or auto thefts. Others might see a larger number of auto accidents. Because of these factors, your insurer might boost your premium to make up for insuring your car in a riskier neighborhood.
If you think your rate is increasing by too much, contact your insurer. If you’re not happy with the explanation, it might be time to shop around for a new policy. Comparison shopping is the best way to land an auto insurance policy with a lower rate.
