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Why Did My Auto Insurance Rate Go Up?

Is your car insurance policy up for renewal? You could be in for a nice reduction! However, this renewal also means your insurance company might just raise your rates — even if you’ve been a safe driver.

If you find yourself asking why an auto insurance company raises your rate — especially if you didn’t file any claims and you steadfastly followed the rules of the road — we’re here to clear up any confusion.

Here’s Why Your Rate Went Up

Your insurance company sets your insurance rate based on a number of factors, and while you do have some control over what determines your rate — for example, driving history, filing claims, speeding tickets — there are some factors that cause your rates to go up that are out of your hands:

Increasing repair costs. Since the cost of repairs is going up, particularly because of new vehicle features like expensive technology, your insurance company might raise your rate to account for the higher claims they’re paying out for repairs.

For example, a simple fender bender with a newer, tech-equipped car can cost much more than a fender bender with an old car sans that technology. Safety technology like rearview camera or sensors can be a pretty penny to replace. These complex designs in cars means more costly materials.

…and increasing medical costs. On a similar note, the cost of medical care is also rising, so insurance companies are maxing out on policy limits to cover the increasing costs of medical expenses. Hence a possible rise in your insurance rate.

The uncertainty of the uninsured. Car insurance is legally required in almost every single state, but that doesn’t mean there aren’t drivers on the road without protection.

While the number of uninsured drivers on the road has decreased over the last decade, according to the Insurance Research Institute, the amount of uninsured claims that insurance companies are paying continues to rise. And though it doesn’t seem quite fair, your car insurance rate may increase due to these costs.

On that note, you may want to consider adding uninsured motorist coverage. This coverage financially protects you if you get into an accident with an uninsured motorist.

More drivers means more accidents. One of the biggest reasons car insurance rates are going up across the country is that there are more drivers on the road than ever.

With a stronger economy in place, our unemployment levels are much lower — meaning more people hop in their car and head to work each day. And with lower gas prices, people are more likely to hit the highway.

More drivers on the road means more accidents, which means more insurance claims the company has to pay out, resulting in — you guessed it — higher insurance rates for you (regardless if you were the one in the accident or not).

Blame Mother Nature. With natural disasters occurring more frequently over the last decade, car insurance companies are paying out more than years before. Comprehensive coverage protects you from weather disasters such as hail storms, floods, tornadoes — which is favorable for you — but insurance companies are paying billions of dollars each year for car damages due to weather related incidents. That’s why you might see a price hike in your insurance rate.

You might be a great driver who avoids accidents and tickets year after year, but factors like the above, not to mention things like costlier accidents, insurance fraud and no-fault policies, could be to blame for the rise in your insurance rate.

How to Lower Your Car Insurance Rate

Your car insurance company is a financial safety net in the event you face the unexpected, which is great for you, but they’re still a business. Sure, there are several reasons your rate could go up, but the good news is, there are just as many ways you can proactively work to lower your rates, including taking advantage of car insurance discounts that your insurance provider offers. Here are some more great ways to help lower your car insurance rate.

At American Family Insurance, we think it’s important for you to understand all aspects of your car insurance, including your rate. Connect with an agent to get the protection and support you need, when you need it the most.

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Related Topics: Discounts , Insurance Needs