In the computing age, auto insurance rates are calculated using some fairly advanced algorithms that take a wide variety of factors into account. While the actual number of factors are not always disclosed there are some fairly common reasons that your insurance rates might increase. Here are 5 of the most common.
1. Ticket or accident
If you get a ticket or are at-fault in an accident, it’s a fairly sure bet that it will cause a subsequent rise in your insurance rates. In most cases, however, if you are involved in an accident and not at fault, your insurance rates should not go up, but this is not always the case. If the other driver is not insured or under-insured and you file a not-at-fault claim with your own insurance company, you could still see a rise in your rates. If at all possible, you should always file any not-at-fault claims with the other driver’s insurance company.
2. Credit issues
If your credit takes a significant nosedive for some reason, you could see a fairly significant rise in your insurance rates. This is also true if you file for bankruptcy or have a judgment of some kind filed against you. Bottom line, great credit equals great insurance rates.
Insurance rates are highly dependent on where your vehicle is garaged (and if it is.) If you move to an area that is considered a higher crime area or even a prime target for auto theft, you will most likely see in increase in your insurance rates. Even if you don’t move homes, changing jobs can also cause a raise in your insurance rates if you have a longer commute. Insurance rates are based on how many miles you drive each week or per month. If you increase the number of miles you drive, your insurance will most likely rise accordingly. Similarly, if moving homes cause you to have a longer commute to work, that may also cause your insurance rates to rise even if you move to an area in all other ways similar to where you previously lived.
4. Lapsed discounts
Sometimes you are given discounts when you first apply for insurance that no longer apply or are no longer available. For instance, if you got a discount for being in college full-time and drop below full-time status, you may lose your student discount. You will also generally get a discount for bundling different types of insurance or insuring multiple cars. If you drop one type of insurance, it might cause an increase in your auto insurance, and if you drop a vehicle from your insurance, it could cause your remaining policy to rise.
5. Agreements with State Department of Insurance
All states have a State Department of Insurance that sets certain guidelines around how much insurance companies can charge. If accident claims rise across the board, it will result in an across-the-board increase in insurance rates. April of 2016, for instance, saw an almost across-the-board 6% increase in insurance rates across the country due to Americans both driving more and getting into more accidents.