Q: I don’t have any accidents or tickets, but my car insurance rates keep going up. Why? It doesn’t make any sense.
A: What most people don’t understand is that insurance is literally a group effort and there are a lot of factors that play a part of your insurance rate that really have nothing to do with you.
Insurance explained in its simplest form is that a group of people pay insurance premiums into an account and when one of those people have a claim money is paid from that account to pay the claim. There has to be enough money in the account to be able to pay the amount of the claim or the whole system will not work. So to determine how much each person should pay the insurance company has to take into account how much vehicles cost to replace and fix today, how much medical bills are, how much rental cars cost, how much towing a car costs, and how much wages are to pay for the employees that service your claims and policies.
If any of those things increase, then everyone’s car insurance rates have to go up to compensate.
Another factor out of your control when it comes to your car insurance rates is the risk factor. For example, recently car insurance companies increased rates because the price of gas went down. Because gas prices dropped people started driving more, the more time people spend driving on the road the higher the chance they will be in a car accident.
If you feel you are being charged too much for your insurance after a car insurance rate increase, it may be time to do a policy review or to start shopping other insurance companies.