Why the Average Car Insurance Price Is Rising—and What You Can Do About It
Beef. Eggs. Meals out. Used cars. These days, it feels like every aspect of life has been affected by pervasive inflation. You probably see it in the bill when you go to the grocery store, when you shop for clothes or when you take that much-needed vacation. And your car insurance premiums could be rising, too.
If you’re wondering why your car insurance costs a lot, it might be because your rates have gone up. While you can control some factors affecting your rates, there are also reasons beyond your control that can cause them to increase (the same applies to factors that can lower your rates).
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As of February 2024, average car insurance costs have gone up a whopping 21% year over year according to the U.S. Bureau of Labor Statistics.
While inflation certainly plays a role, every aspect of the auto insurance business has become more expensive. As vehicles become more sophisticated and technology improves, individual components are more expensive and the cost to repair them increases. Additionally, an increase in natural disasters and severe storms are another critical area driving up insurance costs.
10 Reasons Why Car Insurance May Increase
Here are some common reasons why your car insurance rates might go up:
1. Traffic Violations: Speeding tickets and other moving violations tell your insurance company that you’re more likely to have an accident. The more speeding violations you have, the higher your risk, leading to a rate increase. Even minor violations could raise your rates.
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2. Accidents: Whether you’re at fault or not, accidents on your record indicate risk to insurance companies. At-fault accidents can increase rates, and in some cases, even not-at-fault accidents can cause a hike, depending on state laws and insurers’ data.
3. Comprehensive Claims: Claims for incidents like theft, vandalism, hitting a deer or weather-related damage can lead to rate hikes, depending on your policy and the laws in your state.
4. Adding Vehicles or Drivers: Buying a more expensive car or adding high-risk drivers, like teens or those with poor records, can raise rates.
5. Financed or Leased Car: Because you don’t own the car yourself, you have less of a say in how much insurance coverage you purchase. The lender or leasing company will require sufficient coverage to safeguard their investment, possibly resulting in higher premiums than you’d pay if you owned the car and select your own coverage levels.
6. Local Claims: Rates can go up based on claims data in your area, even if you have a clean record.
Residing in areas with costly car insurance repairs or a high risk of theft or vandalism can raise insurance premiums. Similarly, living in regions prone to severe weather conditions, such as flooding or hail, also can lead to higher rates.
Moreover, whether you live in a rural or urban setting can influence your car insurance costs. Insurance premiums are often higher in cities because the likelihood of accidents increases in densely populated urban areas, where more vehicles are on the roads.
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7. Moving: Changing your address can sometimes increase rates due to changes in risk factors associated with different areas.
8. Age: It may seem unfair, but two factors beyond your control—age and gender—may impact the cost of your auto insurance.
Gender isn’t considered by car insurance companies in every state. Six states—California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania—prohibit using gender to determine auto insurance prices. In other states, men typically pay more than women because they tend to engage in riskier driving behaviors.
Regardless of location or gender, young drivers usually face the highest insurance rates due to their limited driving experience.
As people age, auto insurance rates generally decrease. However, around age 65, car insurance costs for senior drivers often begin to rise again.
9. Lapse in Insurance Coverage: Coming off a lapse in coverage can lead to higher rates when reinstating or starting a new policy.
10. Loss of Discounts: Losing discounts for things like a clean driving record or switching home, condo or renters insurance from the company where it was bundled with car insurance can increase rates, even if you didn’t have any incidents.
Source: https://t-tees.com
Category: WHY
