The 5 Most Common Reasons Your Car Insurance Rate Increases
Finding a low-cost car insurance policy lets you save a lot of money over time. Sometimes, though, your insurance company raises your premium, putting a dent in your pocketbook. The following are the five most common reasons why your car insurance could rise.
Getting a Ticket or Having a Car Accident
Your driving record, including any accidents, speeding tickets, or other moving violations such as speeding or running a red light, can wreak havoc on your car insurance premiums, causing them to go up. After such events, your insurance company could flag you as a risk, which leads to skyrocketing premiums.
Most insurers look back three to five years for mild or moderate violations, such as a speeding ticket or accident. More serious offenses, such as a DUI, driving 15 mph or more over the speed limit, and reckless driving, could haunt you for up to 10 years.
If you want to decrease your car insurance premium, consider taking an approved defensive driving course — check with your insurance company to find out which classes are approved — or changing car insurance companies.
Driving More Miles Per Year Than You Stated on Your Insurance Application
The distance you drive on an annual basis represents just one of the criteria that car insurance companies use to determine your insurance premiums. Car insurers such as Safeco, Travelers, and Metromile offer discounts to drivers who keep their mileage below a certain number per year. Discounts usually begin at 13,000 miles or less annually.
Other insurance companies such as Allstate, Progressive, and The Hartford implement usage-based rate plans. These plans require you to plug a telematics device into the diagnostic port of your car and record the number of miles you drive in a given amount of time.
Buying or Leasing a New Car
Buying or leasing a new car can result in higher car insurance premiums. Lenders require you to carry more comprehensive coverage on a new car to protect their investment if you have an accident. Other factors associated with buying or leasing a new car include the type of car and the features it comes with. Some other common factors that can increase the cost of car insurance include:
- Cars in high demand among car thieves, such as a Honda Civic and a Toyota Camry
- Cars lacking safety features, such as airbags, rear-view cameras, and crash-resistance systems
- Cars that attract more risky drivers, such as a sports car
Adding a Younger Driver to Your Car Insurance Plan
While adding a driver does not always result in increased premiums, adding a younger teen driver will cause an increase in your car insurance premiums. And, because they are seen as a bigger risk than older drivers, younger drivers can expect to pay higher premiums overall if they get insurance on their own. So in the end, adding a teen to your car insurance policy costs less than having them get their own.
Younger drivers do not start to get more favorable rates until they hit the age of 25, though some companies start offering lower rates to young women when they turn 21. Some other options to decrease costs for younger drivers on your policy include “good student discounts,” which usually offer a 10 to 15 percent decrease, and “safe driver discounts” for younger drivers who take an approved defensive driving course.
Turning 50 Years Old
Usually, as you age, your car insurance premiums go down, reflecting the fact that as you mature, your driving habits get better. Once you turn 50, however, your car insurance premiums start to go back up. While some statistics show that the safest drivers include those in the 64 to 69-year-old range, some car insurance companies still raise rates on older drivers.
Luckily, drivers 55 and older can receive a discount on their car insurance for keeping a clean driving record or taking an approved defensive driving course, such as one offered by the AARP. The states that mandate these discounts include:
- New Jersey
- New Mexico
- New York
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
- Washington, DC
Once you hit the age of 70, though, premiums tend to go up, and this gets even worse at the age of 80. Insurance companies that reportedly offer better car insurance rates for older drivers include The Hartford, Esurance, and Mercury.
Finding more affordable car insurance is the best way to combat rising premiums. While many times you can’t control the reasons for a rate hike with your car insurance, you can opt for a more affordable offer from another company. So instead of asking, “Why does my car insurance keep going up?” take action.