Even if you’ve been a safe driver, your car insurance rates can go up. Your frustration is understandable, and if you’re wondering why your car insurance keeps increasing — especially if you didn’t file any claims and you steadfastly followed the rules of the road — we’re here to clear up any confusion.
Wondering why your car insurance rate increased?
Well it all starts with where your premium goes once you pay your insurance company. When you pay your premium it goes into a bucket of money that holds the premium of everyone who is insured by the insurance company. When a customer gets into an accident your insurance company will use those funds to help cover costs for things like vehicle repairs or rental reimbursements. When there are lots of claims, you might see an increase in your premium because the insurance company needs to cover all of the claims being filed. But that's not the only reason why your premium may increase. Other factors such as the rising cost of repairs and health care can impact your premiums. And even though you can't always prevent a rate increase, you can save on auto insurance by maintaining a good driving record, bundling your auto and home insurance together, paying your bill in full and taking advantage of the available discounts. At American Family Insurance we do our best to keep insurance costs low while still providing dependable coverage and excellent service.
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Why Auto Insurance Rates Are Increasing
Your insurance company sets your car insurance rate based on a number of factors, and while you do have some control over what determines your rate — for example, driving history, filing claims, speeding tickets — there are other factors out of your hands:
Increasing repair costs. Since the cost of repairs is going up, particularly because of new vehicle features made with expensive technology, your insurance company might raise your rate to account for the higher claims they’re paying out for repairs.
For example, a simple fender bender with a newer car, equipped with new safety technology, like rearview cameras or sensors, can cost much more than a fender bender with an old car. These complex designs in cars mean more costly materials and expensive repairs.
Increasing medical costs. On a similar note, the cost of medical care is also rising, so insurance companies are maxing out on policy limits to cover the increasing costs of medical expenses. These changes could also result in a possible rise in your car insurance rate.
You moved. When you change where you live, you change where you drive. New areas can mean a different rate since you might be moving into an area with a different type of traffic — for example, moving from the gridlocked traffic of Chicago to gravel roads in rural areas.
More drivers means more accidents. One of the biggest reasons car insurance rates are going up across the country is that there are more drivers on the road than ever.
And with more accidents come more insurance claims the company has to pay out, resulting in — you guessed it — higher auto insurance rates for you (regardless if you were the one in the accident or not).
Mother Nature. With natural disasters occurring more frequently over the last decade, car insurance companies are receiving more claims than years before. Comprehensive coverage protects you from weather disasters such as hail storms, floods, tornadoes — which is favorable for you — but insurance companies are paying billions of dollars each year for car damages due to weather related incidents. That’s why you might see an increase in your car insurance rate.
You might be a great driver who avoids accidents and tickets year after year, but factors like the above, not to mention things like costlier accidents, insurance fraud and no-fault policies, could be to blame for the rise in your insurance rate.
The uncertainty of the uninsured. Car insurance is legally required in almost every single state, but that doesn’t mean there aren’t drivers on the road without protection.
While the number of uninsured drivers on the road has decreased over the last decade, according to the Insurance Research Institute, the amount of uninsured claims that insurance companies are paying continues to rise. And though it doesn’t seem quite fair, your car insurance rate may increase due to these costs.
On that note, you may want to consider adding uninsured motorist coverage. This coverage financially protects you if you get into an accident with an uninsured motorist.
How to Lower Your Car Insurance Rate
Your car insurance company is a financial safety net in the event you face the unexpected, which is great for you, but they’re still a business. Sure, there are several reasons your rate could go up, but the good news is, there are just as many ways you can proactively work to lower your rates, including taking advantage of car insurance discounts that your insurance provider offers. Here are some more great ways to help lower your car insurance rate.
Contact your insurance agent. Talking with your insurance agent will almost always yield better results than interacting with an automated website, as they can help you understand how you can lower your rate, what that would mean for your coverage and why you should or shouldn’t change your policies. Contact an American Family Insurance agent today to see how you can car insurance that fits your needs.
Bundle your insurance. Insurance companies often give customers discounts by bundling their home and auto insurance. The customer saves money on the discount, while the insurance company makes less of a profit than they would if the customer purchased the policies separately, but more than if the customer only purchased one of the policies.
Pay in full. Some insurance companies may offer discounts if you choose to pay your yearly premium in one payment rather than 12 monthly payments. Speak with your insurance agent to see if you can save money by paying your premium upfront.
Review your auto policy. Going over your auto insurance can help you identify coverages that you’re missing, or coverages that you have but might not need. Get exactly the car insurance you need and avoid paying more than you need to by getting in touch with your insurance agent.
Add safety features to your vehicle. Some insurance companies will offer discounts to customers whose cars have safety features such as anti-lock brakes, back-up cameras, alarm systems and more. By installing these features to your car, you reduce your risk of getting in an accident or being the victim of theft —plus, your insurance company incurs less risk and can pass the savings on to you.
At American Family Insurance, we think it’s important for you to understand all aspects of your car insurance, including your rate. Connect with an agent to get the protection and support you need, when you need it the most.
This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.
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