Why Do Auto Insurance Premiums Increase?

Americans pay a wide range of monthly premiums depending on just as many factors. How you drive and the vehicles you insure are only parts of increasingly complex factors that go into creating how much your auto policy will cost you each month. Many things that may surprise you or may not even be in your control that can change the price of your monthly bill. So, why do auto insurance premiums increase?

Take a look at some of the factors that may end up costing you more in auto insurance premiums each month:

1. Moving

The location of your home is an important factor and can raise your monthly rate. If you’re moving out of state, you’ll need a new policy, but if you’re staying in the same state, your rate could go up based on claims in your new zip code. 

2. Your Credit Score

Having a bad credit score can affect a lot of things, so it should be no surprise that it can raise your auto insurance rates. If your credit score decreases, your premium will likely increase. 

3. An Increase in Accidents in Your Area

If the rate of accidents in your state increases, you can count on companies to increase their rates. 

4. Higher Costs of Maintenance

When you make a claim, insurance companies fulfill their end of the bargain by paying the necessary costs to restore the damages you pay to protect. Repair costs for parts and labor are on the rise. Replacing your vehicle can also be an expensive endeavor. The price of an automobile continues to also rise as production and labor costs rise. Auto insurance providers adjust to remain profitable which means higher rates for customers.

5. Rising Amounts of Distracted Driving

If we all look into the mirror, we’re probably all guilty of becoming distracted while driving from time to time. Even the most focused driver on the road can be tempted to check a quick text they are anticipating, view a score update from their favorite team, or skip a song on Spotify. These distractions can be costly and deadly which increases the chances of causing an accident. Insurance companies offset this risk with higher premiums for drivers.

6. Speed Limits Rising in Your State

Drivers may enjoy the ability to hit the gas a little heavier on their morning commute or a road trip, but when states allow higher for increased speed limits, insurance companies take notice. Faster speeds have been shown to produce a higher rate of deaths and companies adjust to these risks by raising your monthly rate.

7. Extreme Weather Events

You may not be driving during a hurricane but it can still deal damage to your automobile. Various extreme weather events ranging from tropical storms on the Gulf Coast to blizzards in Wisconsin can have auto owners shelling out more cash to cover such events. As the weather continues to evolve and become more erratic, expect insurance companies to continue to increase their rates to help cover the costs.

8. Fraudulent Claims

Insurance fraud is a major problem for companies and as a result, it becomes a major problem for policyholders. The old saying “the good must suffer for the bad” is unfortunately true here as your auto premium may rise if others in your area are increasing the amount of insurance fraud companies have to deal with. There are billions of dollars on the line here and companies will protect themselves bypassing some of that burden to their policyholders.

9. Medical Costs are Increasing

The United States as a whole continues to experience an increase in medical costs. When accidents occur, insurance companies are obligated to spend money on hefty medical bills. Policyholders pay more each month to make up for these costs.

10. Getting Older Can Raise Your Rates

Senior citizens can expect to pay more on their monthly premiums as older drivers are more likely to be involved in making a claim. Once you reach 70, expect your age to become part of the statistics used by insurance companies to raise your monthly rates.

11. Rising Auto Insurance Industry Costs

Many of the things we’ve mentioned fall into this category. The cost of doing business cannot be lost. There are additional factors such as raises, the cost of supplies, technology costs, etc. Insurance companies are looking to stay profitable and as costs rise so do insurance rates.

Pay Less for Great Auto Insurance Coverage

Saving money on your auto insurance policy is more important now than ever before. As costs continue to rise, policyholders are wise to consider reviewing their policies and assessing if they are overpaying each month. The experts at TGS Insurance have the tools and experience to create a personalized auto quote for your needs. Through our relationships with many top-rated insurers, we work to create the lowest premium possible without skipping on your coverage. 


Source: Yahoo! Finance

About Katie Rosario

Katie has been in the marketing industry for over 10 years and has a strong passion for writing great content. She has been writing for TGS Insurance for three years and strives to make every piece of content she works on informative and easy to read. In her spare time, she enjoys baking and spending time with her family.