May 24, 2022

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Top 4 Reasons Your Auto Insurance Rates Increase +Tips to Save Money

By Alex Arcand, 4AutoInsuranceQuote.com

Insurance is essential in many factors of life. It protects homes, health, businesses, and vehicles. Out of all those options, auto insurance is one of the most common insurance coverages to have. If you own a car, you most likely have insurance in case anything were to happen. 

Protecting yourself and your vehicle with the right coverage is important, but sometimes the cost can cause people to feel frustrated by their policy. A once reasonable rate has somehow turned into a significant expense each month. 

It can be easy when you’re frustrated to simply think your auto insurance company is raising your rates just because they feel like it. However, many factors can contribute to a rise in your insurance, and some may surprise you.

There are always obvious questions like, does tinting windows increase insurance? Many people make this consideration before deciding to follow through with their window alterations. But there are also a lot more hidden factors that could be behind your higher payments each month.

Let’s dive into ways you may be upping your insurance costs without realizing it.

Location Matters to Your Insurance Company

If you recently noticed an increase in your car insurance rate and you also happened to move to a new area around the same time, the price change shouldn’t be too surprising.

Insurance is all about risk. If your provider notices you recently moved from an area with minimal crime and bought a house in a place with a much higher crime rate, they are going to see more risk in your coverage.

This risk means higher rates. Because you now have a higher likelihood of being the victim of a crime, your insurance sees this as a cause for price increases.

The factors don’t just end with the crime rate in your area. Insurance is thorough, which means they will also look at your commute length to work as well as traffic patterns in your new location.

Highly populated areas have more intersections and more cars on the road at any given time. This means a much higher likelihood of being involved in an accident if you live somewhere with a large population. 

There is also the factor of your commute time. After assessing the area, your insurance will also look into the amount of time you are spending on the roads they have already deemed a higher risk.

All these factors can be reasons your insurance costs have increased without you realizing it.

Bad Credit Can Increase Insurance Rates

A continuous drop in your credit score could be the culprit behind an increased insurance rate. Many companies will base your insurance rate on your credit score.

Insurance companies take your credit score as somewhat of a risk factor scale. If you have a poor credit score, they may deem you a liability to cover. This means they will up your rate because they worry they will lose money on your policy.

There are certain states where this factor is prohibited. In California, Hawaii, Maryland, Massachusetts, and Utah, insurance companies can’t use a changing credit score to up your rates or use your credit score as a factor in your policy altogether.

Traffic Violations Affect Insurance Cost

You likely are already aware of the effects of accidents on your insurance cost, but many people may not know how much traffic violations can affect rates.There are typically two categories of traffic violations your insurance company will look at, minor violations and major violations. 

As you may assume, minor violations are small tickets such as simple failures to follow driving regulations. These typically will not affect your insurance rates, but that doesn’t mean they have none. They can cause small increases in your costs, especially if you receive more than one.

You may get lucky, and your auto insurance company may grant you forgiveness for a minor violation, especially if you have a clean driving record. 

You can also look into a policy that provides you with minor violation forgiveness. This isn’t a free pass to go out and get a bunch of tickets, but it can help if you receive one and don’t want to see your rates go up.

Major traffic violations are the more severe offenses such as DUIs and reckless driving. These can significantly impact your insurance rates because they can peg you as a high-risk customer.

These violations are likely not going to be forgiven by your insurance company, and you may even run the risk of being dropped depending on their severity or frequency.

Adding New Cars or Drivers to an Insurance Policy

You may see buying a new car as a treat for yourself. But your insurance company may see it as a more significant risk to cover. Some vehicles are more likely to be stolen or have lower safety ratings than others.

If the new car you purchase has a less safe rating than your previous vehicle, or it is one of the most commonly stolen cars, you can likely expect your premium to increase based on the newly introduced risk. 

Adding a new driver to your policy can also cause your insurance company to up your rates, especially if the new driver is in the high-risk category, such as a teenager. Your insurance company will see this as a liability and increase your rates to cover the new risk.

Understanding the Costs of Insurance

Insurance is a risky business. Although there are many things you may not see as a risk, your insurance company sees them all. Small actions such as a move, a drop in credit, or a new car may not seem like much change to you, but to your insurance company, they could make all the difference.

If you have a rising rate and feel confused about the cause, you can always call your agent and speak to them about what is affecting your cost. 

Just like the reasons listed above, insurance companies have many factors that affect their prices. You may be surprised to find something you hardly considered had an impact on your coverage.

Keep in mind: Your insurance company doesn’t up your rates simply because they feel like it. They are only covering themselves for the risk they see involved in your coverage. 

You can always discuss other ways to lower your premiums. Just as there are ways you didn’t realize you were upping your rates, there may be insurance savings you were unaware of.

Alexandra Arcand writes and researches for the auto insurance comparison site, 4AutoInsuranceQuote.com. She enjoys helping people learn more about their insurance policy options and how they can save money.

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