For good drivers, there is nothing more frustrating than getting a car insurance renewal and seeing the price go up when you have not had any claims. The first question that comes to mind is, “Why did my car insurance go up? I had no claims and my car is one year older!”
Some Coverage Basics
Now, the component of your premium that pays for physical damage claims to your car usually goes down with age. However, other coverages like liability might go up. However, there are a lot of variables that go into insurance premiums, and with auto insurance, it’s no different. If you look at it you’ll notice there are a lot of different coverages on your auto policy:
- Bodily injury;
- Property damage;
- Un-insured motorist coverage;
- Under-insured motorist coverage;
- Medical payments;
- Loss of income;
- Funeral expense;
- Loss of use;
- Rental reimbursement;
- And more.
These are all things that you are covered for on your auto policy. And remember – your car isn’t the only thing you’re being charged for on your policy. That’s because auto insurance covers far more important things than your car, as mentioned above.
So Why The Increase?
There are two sets of factors that can make the price of your car insurance increase. Knowing what could make your car insurance go up in price when you haven’t had any claims can help you save money.
When you understand the factors, then you are in a better position to negotiate the price and find an insurance company that will give you the lowest cost.
Factors within Your Control
The first set of factors that impact your car insurance rate relates to the things that revolve entirely around your personal situation, the things within your control. Here are some things that can make the cost of your car insurance renewal go up:
- Your claims history and driving record;
- History of convictions or driving violations-causing surcharges;
- Change of address, placing you in a new area that may be more expensive in terms of insurance;
- New drivers added to the policy or changes of the primary drivers of various vehicles on the policy;
- Cancellation of home policy, or other policy causing you to lose the discount for having more than one policy with the same insurer;
- Deletion of a vehicle from the policy (sometimes you get discounts for insuring more than one car);
- If you delete your second car, the price of insurance on the first car might go up;
- Change of employment (you may lose a group discount, a professional discount, or possibly have the distance to work change, making your rate go up); and
- Medical conditions that increase your risk, or restrictions that cause reclassification to high-risk insurance due to convictions like drunk driving charges.
Factors Beyond Your Control
The second set of factors relates to your car and the insurance company: the factors “beyond your control”. In general, here are the factors that are beyond your control that may make your premium increase:
Liability claims paid out by the insurance company for the entire volume of the clients they insure can impact their general liability rates. If the previous year(s) showed a steady increase in the amount they have been paying on claims and defense costs as part of this coverage, the insurance company may make rate adjustments. This is entirely beyond your control.
Increased Claims in Your Area
Collisions, vandalisms, or increased claims in your area. Sometimes due to changes in traffic patterns, weather patterns, or if areas become more congested over time, or a variety of other factors, an area may start to see increased claims. When an insurance company starts to notice these patterns in an area, they may adjust the rates accordingly.
Car Theft Rates in Your Area
An increase in car theft rates in your state or area, or for your car in particular. The way to determine if it is related to your specific car is to ask your agent if your vehicle rate group has increased since last year, and get their insight into the matter.
Mistakes – yes, insurance companies can sometimes make mistakes. Never assume that the rate you got is the best rate or that it is necessarily correct. There are computer and human errors that can occur, so it is always worth reviewing the factors with your representative when you’re in doubt.
Changes to the payment plan fees or structure on your insurance plan. Sometimes insurance companies change the financing rates or add new service charges that you may not have noticed. Take a look at your payment options and make sure you choose one that best meets your needs. Some companies offer zero financing, and others can charge up to 5% or more. This can impact your actual annual insurance cost.