Are you like me? No claims of any kind (ever), no traffic tickets, no accidents, and no teenagers on my policy (so far), yet my car insurance took a jump in premium costs. I asked my auto insurance agent what happened and he gave me these reasons why anyone’s auto insurance rates increase:
1. Your driving record. Nothing has a bigger effect on your auto insurance premiums than your driving record. Keep your record clean and enjoy lower premiums.
2. Your credit report. Most auto insurance companies review your credit report to assess your likelihood of filing a claim. In their experience, people with a poor credit score are more likely to file a claim.
3. How far you drive annually. Ever seen this question on an application for car insurance and thought, “Why do they want to know THAT?” It all has to do with the number of miles you drive on a regular basis. Each mile you drive puts you at risk for an auto insurance claim.
4. How much coverage you want. If you only need the state law minimum amount, your auto insurance rate will be less. But if you’re like me and make the choice for much higher liability coverage on your car insurance, your premium will increase.
5. Your car. A candy apple red Corvette with $40,000 in customized options will obviously cost more to replace than a 10 year old Jeep Cherokee that needs a paint job. Additionally, that super car will probably be driven a little faster and the car insurance companies know it.
6. Your zip code. Postal zip codes have certain accident rates, DUI rates, theft rates, and claims rates. The more claims of any type within your zip code, city, or state, the higher your auto insurance premiums will be.
7. Your claims history. If you have a history of filing car insurance claims, no matter who’s fault, you’re a bigger risk to insurance companies.
8. Your driving experience. The less driving experience you have, the higher your auto insurance premiums. This is why the insurance application asks how old you were when you were first licensed to drive a car.
9. Are you currently insured? If you’ve lapsed multiple car insurance policies in the past, insurance companies view you as a higher risk.
10. Do you have a low deductible? Low deductibles on the back end mean higher premiums on the front end. A better choice is to raise your deductible and save the difference in your auto insurance premiums as part of your emergency fund.
So why did MY car insurance rates increase? The answer wasn’t easily determined but it’s basically because my state’s rates were increased across the board. Sounds like it may be time to go back to NetQuote and make sure I’m getting the best deal.
If you want to make sure YOU are getting the best deal, head on over to NetQuote. There, you can shop around for any type of insurance without the hassles of dealing with an agent until you’re good and ready.
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I would also add that eligibility for discounts can change over time (not to mention that different insurance companies have different discounts and criteria for getting discounts) so it can definitely pay off to set some time aside every 6 months or so to step back and re-evaluate options.
For example, most have heard of the “good student” discount from different auto insurance companies where if a student on the policy has good grades then they can get a discount on their car insurance rates. It is easy to forget about this discount if the student did not have stellar grades in the past.
If the student now has good grades then now is a great time to start seeing if one can take advantage of the discount that they couldn’t get in the past.
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A lot depends on where you live also. Here in Florida our car insurance rates can vary a lot depending upon how close one lives to a big city or heavy traffic.
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Ron 's reply:
October 22nd, 2009
Yep. Covered that one in number 6 — your zip code.
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