6 Reasons Your Auto Insurance Rates Might Jump

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It may cost more than we want, but insurance coverage is a must when things go wrong. 

Last summer, shortly after moving to another state, we purchased a new auto insurance policy. I recently had a question about our coverage and called our agent. Before ending the call, the agent gave me a heads-up that I should expect our premiums to go up this summer when our policy is due for renewal. This is in spite of the fact that my husband and I have clean driving records, high credit scores, and have rarely made a claim.

For most Americans, rates are up across the board. We have inflation to thank for a portion of those rate increases. However, there are other reasons rates can jump. Here are the six of the most common ones.

1. Driving record

Speeding violations, reckless driving, driving while intoxicated, and accidents (even if you were not at fault) can all lead to higher rates. Rate increases tend to stick around for three to five years and can end up costing far more than anticipated.

2. A new ride

It usually costs more to make repairs to a new car than an old one following an accident. A new car is also a more tempting target for anyone who’s looking to break into or steal a vehicle. If you’re considering buying a luxury car or a vehicle with a powerful engine, you might give your insurance company a call first to learn how much it will boost your insurance rate.

3. Credit score

You may not realize that insurance companies factor in your credit score as they determine your policy premium. That’s because research has shown that people with lower credit scores tend to make more insurance claims than those with higher scores. If your score is lower than you would like, you can always take steps to raise it before applying for your next insurance policy.

4. Where you reside

Simply put, some areas of town are safer than others. Police records show where the most thefts and break-ins occur. They also reveal where the most accidents take place. If there’s a sudden spate of car thefts in your neighborhood, it could impact your rates.

Where you live can also impact which perils are most likely to occur. Let’s say you live on a flood plain or your house backs up against a large river that’s known to overflow during storms. The fact that your car is at greater risk of suffering flood damage will impact your rates.

5. An additional driver

Adding a driver to your policy is likely to increase your premiums, particularly if that driver is a teenager or an adult with a less-than-perfect driving record.

Any time you add a new driver to your policy, make sure to take advantage of every discount available to you. For example, if a teen driver is a good student, ask the insurer about good student discounts.

6. Number of previous claims

Insurance coverage can be priceless, especially when it protects you from financial peril following a claim. However, any time you make a claim you may find yourself facing a rate increase. Whether your rates go up depends on several factors, including whether you were at fault, how many claims you’ve made in the past, and the size of the claim.

If you have a small fender bender or one of your car windows is broken by a tree branch during a storm, you might weigh the cost of making repairs on your own against the potential cost of a higher insurance premium.

While no one wants to pay higher rates, there are few things more dangerous to your financial health than driving without insurance coverage.

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