Reasons Why Auto Insurance Goes Up

Auto insurance is a toll bridge, over which every honest driver has to pass.” – Jane Bryant Quinn

Auto insurance premiums can often feel like a mystery.

You may have gone through the past year with no accidents or claims, only to find your rates have increased when it’s time to renew. It can be frustrating, especially if you feel like you’ve done everything right.

But the reality is, many different factors contribute to why auto insurance goes up, and not all of them are directly related to your driving record.

Key reasons why auto insurance premiums rise…

1. Inflation and the Rising Cost of Repairs – One of the biggest reasons your auto insurance rate increases can be the rising cost of repairs and medical care.
   • As inflation affects the price of everything from car parts to labor, insurance companies have to adjust their rates to cover the increased cost of claims.
     • Even if you don’t file a claim, your premium may rise because of the overall increase in repair costs across the industry.
   • For example, today’s vehicles are more technologically advanced, featuring sensors, cameras, and complex software systems that can make repairs more expensive. A simple bumper repair that used to cost a few hundred dollars may now run into thousands because of the integrated technology.
2. Higher Medical Costs – Another factor influencing auto insurance rates is the cost of medical care.
   • In the event of an accident, even minor injuries can lead to substantial medical bills.
     • As healthcare costs continue to rise, so do the payouts that insurance companies must make for injury claims. To offset these higher costs, insurers  must increase premiums.
3. Increase in Severe Weather and Natural Disasters – The frequency and intensity of natural disasters such as hurricanes, floods, wildfires, and severe storms have been rising.
   • As these events become more common, the number of insurance claims due to weather-related damage also increases.
     • Cars damaged by floods, hail, or windstorms contribute to higher claims, and as insurance companies need pay out more, they also need to pass those costs on to all policyholders, not just those directly affected by the disaster.
   • Even if you live in an area that is not typically impacted by severe weather, you may still see a rate increase due to the overall rise in weather-related claims across the country.
4. More Accidents and Claims Nationwide – In recent years, there has been an increase in the number of accidents on the road. With more accidents happening, insurance companies are paying out more in claims, leading to higher premiums for everyone.
   • Some contributing factors include:
     • distracted driving
     • more people on the road
     • riskier driving behaviors like speeding
   • Even if you haven’t been in an accident, the trend of more frequent and expensive claims will still affect your rates. Insurance companies assess risk at a broad level, and if they’re seeing more claims overall, your premiums can go up as a result.
5. Changes in Your Personal Circumstances – There are also personal factors that can cause your auto insurance to increase. Here are a few:
   • Your Age: Drivers under 25 or over 65 are statistically more likely to be involved in accidents, which can lead to higher premiums.
   • Your Driving record: If you’ve received speeding tickets, been involved in accidents, or had any other violations, your insurance rates will likely go up.
   • Your Location: If you move to an area with higher rates of accidents, theft, or vandalism, your premiums may increase.
   • Your Vehicle type: The car you drive also plays a role. Luxury vehicles, sports cars, or cars with high theft rates generally have higher insurance costs.
   • Your Credit score: In some states, insurance companies use your credit score as a factor when determining your rates. A drop in your credit score could lead to higher premiums.
6. Changes in State Regulations – Insurance rates are also subject to regulation by state governments.
   • Some states may change their insurance requirements, mandating higher minimum coverage levels.
     • When these regulatory changes occur, insurance companies often adjust their rates to comply with the new laws. This can lead to a rise in premiums for drivers in those states.

How to Manage Rising Auto Insurance Costs

While you may not be able to control many of these facts, there are things you can d0 to help keep your premiums as low as possible:

• Shop around: Different insurance companies offer different rates, so it’s always a good idea to shop around and compare quotes before renewing your policy.
• Look for discounts: Many insurers offer discounts for things like…
  • bundling home and auto policies
  • having a good driving record
  • installing anti-theft devices
  • paying your premium upfront.
• Consider higher deductibles: Choosing a higher deductible can lower your premium. Just make sure you have enough savings to cover the deductible in case of an accident.
• Maintain a good credit score: If your state allows insurers to use credit scores in rate-setting, maintaining a strong credit score can help keep your premiums down.
• Talk to your Insurance Agent: Review your concerns and your needs.

By staying informed and taking proactive steps, you can minimize the impact of rising rates and ensure you’re getting the best possible coverage at the most affordable price.

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At Whitcomb Insurance we appreciate the opportunity to sit down with our clients to discuss their needs, and we would be happy to sit down with you, to answer any questions you might have, whether it’s about Long-Term Care, auto, homeowners, small business or life insurance. You can count on us to be totally honest and upfront with you!

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Contact us or give us a call at 425-391-8731.