Unexplained vehicle insurance rate increases can be frustrating. Here are possible reasons your premiums can rise. There are many possible reasons vehicle insurance rates increase, and unfortunately, some of those reasons aren’t always in your control. But understanding the factors that influence insurance rates — and what you can do to keep them low — may help make it less frustrating when it does happen. Here are some of the most common reasons your vehicle insurance may rise.
1. Changes in the economy
When costs for transportation of parts go up or the supply of a needed component for your vehicle is scarce, prices increase.
The global supply chain woes, particularly for computerized components or electronics within your vehicle, are causing manufacturers to reduce production. Labor costs at repair facilities have increased over time, and as they go higher, the overall repair bill to fix your car goes up too. While you may not feel this immediately in using your insurance and paying your excess, the effect can be seen down the line with potential premium increases.
2. You moved to a new location.
Believe it or not, your insurance rate can change, even if you only move a couple of blocks away.
Some insurers consider your ZIP code when determining rates. If you move to an area that’s more densely populated and has a higher risk of theft, your rates will likely increase. Fortunately, the reverse is also true. If you trade in your downtown loft for a more rural lifestyle, you’ll likely see your premiums decrease.
3. You were in an accident.
Whether it was your fault or not, getting in a vehicle accident can come with significant costs, which is the main reason having vehicle insurance is so important.
At-fault accidents can almost guarantee that your rates will increase, because you’re considered a higher risk. And yes, one-car accidents are considered at-fault since there’s no one else involved. In addition, your insurance rates may rise even if the accident wasn’t your fault, depending on the insurance provider. Multiple not-at-fault accidents may also deem you a high-risk driver and cause a rate increase.
4. Rate adjustments
When an insurance company revises its rates, it’s usually a result of the rising costs of doing business — which can occur due to things like an increase in claims, growing risk, inflation or service improvements. It can also be based on the insurance company’s outlook toward business risks or how their operation is performing.
Vehicle insurers are also required to keep a certain amount of money in reserve as a safeguard to pay for unexpected claims. If your provider needs to increase their reserve funds, they may choose to raise premiums.