What, Exactly, Is Making Your Car Insurance Rates Go Up?
By Anthony Peck
There’’s nothing quite like that disgusted feeling you get when you take a good, long look at your latest car insurance renewal and realize that your rates have gone up-again. Your car’’s not getting any more expensive! Why did your insurance?
There are three things that usually cause car insurance rates to go up unexpectedly, and it’’s up to you and your insurance agent to figure out which is wreaking havoc with your policy. The first is being convicted of an accident or a traffic violation. You know what you did, you know when you did it. What you didn”t know that one little speeding ticket or fender bender was going to have such a major effect on your insurance!
In terms of relative risk, someone who’’s already bent and broken the traffic laws (and gotten caught doing it) is going to do it again,and again,and again. That means you”re more likely to cause an accident, file an insurance claim and cost your insurance provider money. They really, really hate that! So as soon as a violation goes on your license car insurance companies jump on it like the last piece of bread on a deserted island and send your rates skyrocketing.
The second possibility is that you raised your coverage during the previous policy period and forgot about it, because it didn”t go into effect until this cycle. Has your state changed their liability premiums? Did you decide to add comprehensive or collision coverage to a car that previously only carried liability? What about additional medical insurance or rental reimbursement?
You get what you pay for, and adding on to your insurance policy is almost always going to make your rates go up.
Finally, there’’s the economic reality of inflation. If you haven”t changed your policy, you”re still tooling around town on the same four wheels you had last year and you”re absolutely positive there are no traffic violations on your record you”re probably dealing with the aftermath of a company-wide hike in car insurance rates to deal with the inflating cost of services.
When car insurance companies pay for repairs to your car they”re dealing with the market (or slightly below market, if they”ve worked out a deal with a repair shop in exchange for sending business their way) cost of auto repair. If you”ve had to do any work at all on your car you know that can get really expensive, really quickly. Insurance companies that pay out more in repair claims each year due to inflation without raising their rates to compensate isn”t going to be in business very long.
Before you go on a rant about the fact that the cost of car repair hasn”t gone up that much, think about the cost of medical care. Most of us can”t even afford to go to our family physician without health insurance these days. Car insurance companies are paying standard rates for bodily liability claims, which can raise up over $5,000 a day for ICU care after a motor vehicle accident-and we”re not even talking about the ER or trauma center, their stay in a regular room during their recovery period or the rehabilitative therapy they”re going to need to get back on their feet.
Chances are, one of these three is the driving force behind the rising cost of your car insurance. Now all you have to do is talk to your agent and figure out which one it is-and what you can do to keep it from going up any farther!
About The Author
Anthony M. Peck is the Senior Developer for QuoteScout.com. For more on the inside scoop on your car insurance, check them out at http://www.QuoteScout.com.