This is Why Your Insurance Premium May Increase This Year

March 13, 2018

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No one wants to pay a higher car insurance premium, but sometimes rates go up following an incident. We have found that knowledge is one of the best tools to help reduce your risk of paying too much for auto insurance. Here are a few reasons that may make your insurance premium go up.

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 filling out initial questionnaires, be as upfront as you can so you don’t run into problems later on.

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 National Highway Traffic Safety Administration’s Fatal Accident Reporting System, from 2010 to 2016 the numbers showed an increase in overall fatalities due to motor vehicle traffic accidents. When taking into account the previous and current population we have observed that in 2010 there were 10.67 casualties per 100k of the population in comparison to 2016’s 11.59 casualties per 100k. With the decrease in gas prices over the previous years we find that people are driving more which in turn will increase the risk of accidents on the road. This correlation is evident in the data provided.

Again, not every accident is preventable. However, drivers can keep the aforementioned causes in mind to avert danger and a hike in their insurance premium.

Another thing to add is that if enough accidents occur throughout the year, it could affect everyone’s premiums. Even if you weren’t at fault during the accident.  If enough claims are made to disrupt an insurance companies combined loss ratio, this could result in increased car insurance rates across everyone’s policies.

Receiving a Traffic Violation

It’s no fun getting a ticket. On top of having to pay the ticket, you may have to pay the insurance companies more money. Your rates will be affected differently from state to state and from company to company so there is no way to tell exactly how much of a price difference your policy will change. If you do find that your insurance rates increase, be sure to shop around for other car insurance companies just to make sure you’re getting the best deal and not paying too much for the same coverage.

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.

Natural Disasters

In 2017, the U.S experienced the most expensive year due to damages from natural disasters. According to the National Oceanic and Atmospheric Association, we experienced an estimated 306 billion dollars in damages from weather and climate disasters. Hurricane Harvey damaged an estimated $125 Billion, Hurricane Maria and Irma an estimated $145 billion combined, & California’s wildfires accounted for $18 Billion just to name a few. There were a total of 16 natural disaster events 2017.

Why am I telling you this? Because all of these natural disasters affected the driving conditions and resulted in an increase in accidents which again resulted in more claims to the auto insurance carriers. This too affected and may further affect everyone’s insurance rates. Even though it was nobody’s fault but mother nature.

Lapsing Car Insurance

What is a lapse in auto insurance? This is when your car 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 aware of 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.

Minimum State Car Insurance Requirements Change

It’s not often, but sometimes a states minimum requirements may change for auto insurance coverage. The car insurance companies are most likely aware of this before it happens and will adjust your premium accordingly. However, it is important that you also keep up to date with all state law changes.

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.

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