Car insurance premiums are a significant part of everyone’s budget, whether they’re paid monthly, quarterly, or even annually. You may enjoy the same rate for years and then suddenly discover that your next renewal is coming at a slightly higher rate than before. And if you’ve had a few accidents or changed your coverage, you may discover a bigger change in your premiums. Don’t let these rate changes surprise you as there are numerous factors that affect car insurance premiums, either within or outside your control.
Your Age and Driving History
Young drivers under the age of 25 pay some of the highest rates for car insurance, but you shouldn’t see your car insurance rates increase because of age after that point. In fact, most people enjoy a noticeable decrease in their rates as soon as they hit 25. Regardless of age, you will notice increased premiums if you have one or more accidents. These increases often drop off within a few years if you maintain a clean driving record. Serious and at-fault accidents will result in your car insurance rates going up more than just minor traffic tickets. Taking a defensive driving course is the best way to lower any recent increase in increase costs due to a few mishaps on the road.
Weather-Related Events
Natural disasters like blizzards, wind storms, and earthquakes all raise rates in the affected area for at least a short time. Since most natural disasters cause extensive damage to vehicles, there’s a lot of claims that flood in all at once. Since this increases the insurance company’s costs, they have to spread that impact around to their insured members by raising premiums.
Distracted Driving
Distracted driving is nearly as dangerous as drunk driving, yet it’s far more common. Many people that would never drive after a drink think nothing of glancing at their phone when a text comes in. If your distracted driving leads to an accident or ticket, you’ll see your premiums increase in response.
The Car You Drive
Since the insurance company has to pay for repairs or to replace a totalled vehicle when you insure it through them, they have to charge a fair rate based on its value. If the insurance company lets you pay $10 a month and after five months you totalled a $100,000 car, they’d be paying $99,950 for the replacement and you’d only have sent them $50. The insurance agency has to balance out the risk of you needing money back against how much you’ll send in each month. Many large reimbursements are covered by the car insurance premiums paid by multiple drivers, so these insurance companies would quickly go out of business if they gave everyone very low rates. Drivers with cars that will cost more to replace or repair must pay more to reflect the increased costs to the insurance company. Switching to an older, more reliable, less expensive car can reduce your monthly costs for insurance, but make sure the car is reliable and won’t need constant repairs.
Cost of Repairs on Tech-Heavy Vehicles
If you drive a newer vehicle that has plenty of technology packed into it, the repairs will naturally cost more than for a basic vehicle. You don’t have to pick optional upgrades for this to occur either. Many new cars feature extensive safety technology that must all be reset and replaced after an accident, increasing repair costs and therefore your premiums for insurance.
Fraud
You might be perfectly honest with the insurance company every time you make a claim, but not everyone is so honest. Fraudulent claims and drivers going without insurance both drive up rates. False claims lead the insurance company to pay out when there wasn’t really an accident, while uninsured drivers don’t pay their fair share of the costs of an accident. Reporting any cases of auto insurance fraud you know about can help reduce premiums for everyone.
Your Address
Many people are surprised to learn that their neighbourhood and local crime levels can affect the cost of their car insurance. Consider that repairs for damage done during theft or vandalism is covered by many policies and you may understand why addresses matter. It’s often surprising to move from one neighbourhood to another, often within the same city or region, and find your insurance premiums changing dramatically. If you’re planning a move, consider calling your broker to see how different areas you’re considering might affect your costs.
Insured Drivers
If you add a partner, spouse, child, or other family member to your insurance policy, you’ll see your rate increase by the amount necessary to cover them and their vehicle. This can be more than expected if you weren’t aware of their driving record or the cost to insure their particular car. You shouldn’t see the amount you pay go up, only an addition of the amount necessary to cover the new driver and vehicle. It may be more than double what you paid for yourself alone if there are other reasons for a high rate for the new driver, such as a teen getting their first car.
With these tips, you should have a better understanding of what makes your car insurance rates increase and decrease. Aim for the lowest possible rate by driving safely and taking advantage of some of the many discounts offered by your insurance broker.
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