Why Isn’t My Car Insurance Getting Cheaper?
You’re going through the filing cabinet and you come across an old car insurance bill. You’re about to toss it away, when you look more closely at the numbers…your car insurance premium increased.
Wait a minute! Eight years ago, you paid $720 for a year’s worth of car insurance. This year, you paid $916. You haven’t been in any accidents. You’re still driving the same old car. “Why hasn’t my car insurance gone down?” you demand.
The simple truth: Because auto insurance companies don’t want to lower your premiums. Why would they? They’re not obligated to give you cheap car insurance just because you’re a loyal customer. They’ll take every opportunity to raise them, in fact. Here are some of the reasons your insurance isn’t going down. Plus, we have some ways to fight back and get cheaper car insurance.
Five Reasons Why Car Insurance Rates Go Up
Of course, your car insurance will probably get more expensive if you get a speeding ticket, make a claim, buy a new car or move from the ‘burbs to the city. But what if nothing in your life has changed, and it’s still more expensive? The reason could be…
- Because car insurance companies know you’ll put up with it. They have a sneaky practice called price optimization, which means analyzing data about you, the customer, to determine just how much they can raise your rates without making you mad. For example, if you’re not a very price-conscious shopper in other parts of your life (like your mobile phone provider), your insurance company knows that. “Then your insurer applies its trade-secret algorithms to predict how much of a price increase you’ll tolerate without quitting the company and shopping for a better deal elsewhere,” as Consumer Reports explains. Is this behavior nice? Not at all. Legal? In most states, yes.
- Because car insurance companies hope you’ll be satisfied with loyalty perks instead. Most insurers have some kind of tiered rewards system, where you earn more perks the longer you’re a customer. But look closely at these rewards, because they’re not necessarily that valuable. Stick with Progressive for 10 years, for example, and you earn Emerald status. Sounds good, but the only difference between Diamond (5 years) and Emerald is that the company supposedly will respond to your phone calls faster. After 10 years, they’d better pick up the phone!
- Because your neighborhood has become riskier. If vehicle thefts or collisions have recently increased in your part of town, your car insurance rates might go up too.
- Because your car has become more expensive to fix. Yes, your car is eight years older, which means its value has probably gone down. But the cost to repair it may have gone up, which can lift insurance rates.
- Because the insurance company has raised rates across the board. Insurance companies have good years and bad years, just like the rest of us. If your car insurance company paid a lot of claims the previous year, it may raise everyone’s rates.
How To Make Your Car Insurance Rates Go Down
OK, so we’ve looked at all these reasons why car insurance rates go up — what now? When do car insurance rates go down?
- When you compare cheaper car insurance quotes. The absolute easiest way to lower your rates is to get quotes from multiple competing insurance companies. That way, you can see the range of prices and find out how low insurance companies will go.
- When you ask your insurer to lower them. If you’re paying too much but you like your insurance company, get an agent on the phone. You can say you’re considering switching insurers and ask (politely, of course) if they can lower your premiums. This tactic’s most effective if you have a competitor’s offer in hand, so compare car insurance quotes first.
- When you drop collision/comprehensive coverage. If you drive an older car that’s barely worth repairing anyway, it might make sense for you to drop collision coverage so you can save on your insurance. We ran the numbers, and found that, just as an example, the driver of a 2001 Honda Civic could save $168 to $204 in a year by dropping collision/comprehensive.
- When you raise your deductible. Choosing a higher deductible is a simple way to make your car insurance rates go down. But only do this if you can afford to pay $500 or $1,000 out of pocket for repairs.
- When you lower your insurance coverage. Lowering your limits will also make your car insurance rates go down, but be careful. If you get into a serious accident and don’t have enough insurance, that could wreck your finances. Your liability insurance limit should be equal to the total value of your assets, so you’re protected if someone sues you.