Why Did My Car Insurance Go Up?
Did you notice an increase in cost for your auto insurance policy? Perhaps you recently received a letter from your insurance company letting you know about future increases to your policy’s premium. In order to understand why your car insurance went up, it’s important to learn about the various factors that impact the cost of auto insurance. Some of these factors we can control, but other factors are beyond our control. It’s helpful to understand the many nuances so that you can make more informed decisions regarding your car insurance needs. If you need any help getting good auto insurance coverage at an affordable price in Arizona, contact James Grace Insurance today. Our team will answer all of your questions and do the hard work to make sure you have the best possible deal.
Does Car Insurance Go Up Every Year?
For many people, the answer to this question is yes. Car insurance often goes up, even if only a slight amount, each time the policy is renewed. This could be every six months or every year. Naturally, the next question you might ask is “why?”. Since there are various factors that impact the cost of car insurance, it’s helpful to break it down into two categories:
- Individual Risk Factors
- Increase in Car Insurance Company’s Expenses
Individual Risk Factors for Car Insurance
Individual risk factors refer to your personal driving record or change in insurance needs (or someone else that is on your auto insurance policy). Examples of individual risk factors include:
- Filed a new claim
- Traffic violation on record
- Add a new vehicle to the policy
- Update the policy to change your vehicle
- Add a new driver to the policy
- Change drivers on the policy
- Age of drivers on the policy
- Increasing the amount of coverage
Technically, you have some control over these factors in that they depend on what you do or don’t do. Of course, with multiple drivers on the policy, you might not be able to control whether or not another driver gets in an accident and files a claim, however they remain your responsibility since they’re on your policy.
With the exception of minor claims (less than $1,000) and minor traffic violations, all of the reasons listed above add more risk in the eyes of the insurance company providing coverage. As a result, the cost of your auto insurance premium is likely to increase if any of these factors come into play.
Increase in Car Insurance Company’s Expenses
There are other reasons the cost of auto insurance might go up for you that have nothing to do with what you do or don’t do. These include:
- Expiring discounts – Some of the discounts you initially received when starting your auto insurance policy might decrease over time and eventually disappear or simply expire after your first policy term. If that happens, then the cost of your insurance will naturally increase.
- Insurance rates change – An insurance company might increase their premiums if they find that their rate levels are too low compared to their expenses from recent claims. If the insurance company is suffering losses because their rates are too low, then they will need to remedy that with an overall increase in auto insurance premiums.
How Much Do Individual Risk Factors Matter?
You might be wondering how much control you have in the cost of your auto insurance and how the insurance companies weigh individual risk factors in their cost-benefit analysis. Insurance companies might vary in their approach to these risk factors, but in general, all insurance companies will re-evaluate policies before renewal. In some cases, they might increase costs due to an increase in risk factors. Other times, they’ll decrease costs due to a decrease in risk factors (such as a clean driving record or removal of a driver from the policy).
No matter what, you should work with a car insurance company that is known for being fair when evaluating individual risk factors and the overall cost of auto insurance.
Contact James Grace Insurance for Your Auto Insurance Needs
Looking to start or change your auto insurance policy? Make sure you work with an insurance company that you trust. James Grace Insurance, an independent insurance agency based in Scottsdale, AZ, has you covered. Our experienced team will shop around for the best coverage at the most affordable price so you don’t have to. We’ll do the shopping so that you can do the saving. You have nothing to lose and everything to gain. Contact us today to get started!