5 Instances That Will Increase Your Insurance PremiumAugust 26, 2015
No one wants to pay a higher insurance premium, but sometimes it increases following an incident. Luckily, knowledge is one of the best tools to reduce your risk of paying hand over fist for insurance. Here are five instances that can make your insurance premium go up.
1. Providing inaccurate information
Misinforming an insurer is a risky move that can result in a higher-than-expected premium. Some people give out a different address or conceal previous driving records rife with accidents in an effort to get a lower premium quote. This technique often works because the premium is contingent upon factors such as location, driving record and credit score in some instances. Lying to an insurer is considered insurance fraud. While a few may never be found out, others aren’t so lucky.
“Lying to an insurer is considered insurance fraud.”
Not only does providing incorrect information leave you with a surprisingly higher premium once the insurer runs background checks, but it’s also against the law. When you’re filing out initial questionnaires, be as up front as you can so you don’t run into problems later on.
2. Getting into a car accident
Car accidents are the worst. Injuries aside, they are a real headache to deal with from filing a police report to checking in with the insurance company. The real kicker is that the majority of car accidents are preventable.
According to the Auto Insurance Center, a car information website, data gleaned from the National Highway Traffic Safety Administration’s Fatal Accident Reporting System from 2009 to 2013 demonstrated that failure to stay in the proper lane was the most common cause of lethal car accidents. Second was failure to yield the right of way. Other causes include improper turns, reckless or careless driving and overcorrecting.
Again, not every accident is preventable. However, drivers can keep the aforementioned causes in mind to avert danger and a hike in insurance premium.
3. Moving to a new city
Plenty of debt-riddled millennials who flock to the city after college might encounter additional insurance fees. That’s because your premium heavily depends on where you live. Someone who lives in a densely populated neighborhood might face a higher insurance premium because he or she is at a higher risk of accidents, thefts, collisions and injuries.
Certain urban areas that have economic turmoil and high unemployment rates are typically more expensive when it comes to car insurance because these areas tend to be home to many drivers who are uninsured, increasing risks for other people on the road.
Before packing your bags and moving to a new place, do your research to gain realistic insight on the insurance premiums in the area. Also note that the premium may vary from one company to the next.
4. Lapsing car insurance
As the Department of Motor Vehicles put it, an auto insurance lapse occurs when you own a car that no longer meets the minimum state requirements for coverage. The lapse time frame is between the moment your insurance expires and when you purchase new insurance, hand in your vehicle plates, offer proof of repossession or proof of purchase for insurance in a new state for someone who’s moved.
Often times, the driver is responsible for the lapse. It’s a result of failure to make insurance payments or excessive accidents or violations. Once the DMV is privy to the violation, the driver’s premium may go up, but the person may also face penalties such as license suspension, fines and community service. The best way to ensure your insurance doesn’t lapse is to pay the bill on time and report any incidents to your provider.
5. Expiring special offers
Many car insurance companies give drivers discounts and deals, many of which expire over the course of a few years. Some of these specials include discounts for being a good student, insuring more than one vehicle at a time and owning a car with particular safety features.
Some companies even offer a loyalty discount to clients who have been with the insurance company for a long time. Less common discounts might include a price drop for newlyweds, and the list goes on.
Major life changes – moving to a new area code or graduating college – to subtle differences such as swapping one car feature for another may adversely affect your car insurance premium. To avoid any surprise charges, consult your insurer prior to foreseeable changes. This way, you can decide if you really want that additional feature, or if you’d rather pay a cheaper premium.
For more information on car insurance premiums or to glimpse car-related stories, visit compare.com.