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What Causes Auto Insurance Increases?

Written by Michele Wilmonen. Posted in Rates, Research Last Updated: 04/23/2011

Auto insurance can increase because of your own driving habits and also for reasons that are out of your control, like other drivers — and the economy.

Car Climbing the Increasing Stacks of Insurance Premium

Many factors can make your auto insurance continue to increase.

Insurance rates go up for all different kinds of reasons, some of the reasons you can control and some you cannot. Factors such as other driver’s unsafe driving, weather and the economy are all factors that you have no control over.

But, the one thing that you can control is your own driving habits, which is the one factor that is what causes auto insurance increases the fastest.

The Economy Increases Auto Insurance

While this one can’t be seen immediately it does have an effect on your insurance premiums.  An insurance company usually doesn’t just have their business dealings in auto insurance. They have investments, they are insuring businesses and homes and they themselves are usually owned by stock holders.

So when the economy takes a down turn and stocks start to fall, businesses fail and homeowners stop paying their insurance premiums insurance companies start to lose money. They have to still turn a profit so that their own stock holders don’t start selling their stock and they do this by raising rates on the clients they still have, including car insurance customers.

Statistics Increase Auto Insurance

Insurance is all about numbers and insurance companies love statistics.  Statistics show what categories of drivers are the safest, what geographic locations have the highest theft rates and what credit ratings are most likely to commit insurance fraud. A negative change in the statistics of any of the categories that you are in can make your insurance go up at your next renewal.

Other Drivers Increase Auto Insurance

Your driving record is not the only driving record that can make your insurance premiums go up. Drivers that are not even insured with your insurance company have a large impact on making insurance premiums go up, especially uninsured drivers. When an uninsured driver hits another driver that is insured with your insurance company, your insurance company has to pay out for the damages for their driver (if there is coverage).

This means that there is no other insurance company to reimburse your insurance company and getting the money that was paid out for the accident from the other person can take a long time. So to make up for the money they had to pay out, they increase everyone’s premiums.

You Make Auto Insurance Increase

The only factor that you have any real control over is your own driving habits and how safe of a driver you are. Drivers that cause accidents and are ticketed for unsafe driving are going to be charged higher insurance rates. Insurance companies want to collect as much premium as they can on these unsafe drivers before they cause the accident that they are at high risk to.

Driving safe and obeying traffic laws will keep your insurance premiums down. Also if you are a good driver and go a certain period of time without a ticket or an accident, not only will you be paying lower rates, you could also qualify for good driver discounts that could decrease your premiums even further.

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Michele Wilmonen

Michele’s first introduction to insurance was working for a major insurance company as a file clerk and a mailroom supervisor in a regional office. She learned insurance directly from underwriters and claims adjusters from questions and also watching them do their job. Since then, she’s earned a number of insurance certifications from the Insurance Institute of America and also a Bachelor’s degree from the University of Idaho. She blogs at Car Insurance Guidebook.

Reviews (2)

  • michele

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    I hit a stopped car before I could stop completely, and that car bumped the car in front of her as a result. All bumpers were scratched but no dents. The cops came and filled out a report but said there was probably less than $3,000 in damage. No one complained of injury. Later on that eve the driver of the car I bumped complained of neck pain and has since seen her chiripractor for care and they have put in a claim with my insurance. Can you estimate how much my insurance will go up? (I know chiropractic care and auto insurance claim don’t mix well. $$$$$).

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    • Michele Griffin

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      Sorry to hear about your accident. I hope things work out for you.

      With an injury like the one that is being claimed against your insurance, it can take a couple days for symptoms to appear. I was in a more serious accident than the one you were in, but at the time of the accident I refused to go to the hospital because I thought I had just bumped my knee really bad. It wasn’t until two days later I could hardly sit without backpain.

      I went to my chiroprator and found that the accident had twisted 3 vertebre in my back and 2 in my kneck 180 degrees, as well as a sprain and a dislocated rib. I ended up in physcial therapy for 9 months because of all that. He said the reason I didn’t feel it until a couple days later is because that is when the swelling from the initial trauma finally went down.

      With a light accident like yours, this may be the case where the other driver didn’t feel it until the swelling went down later. However, when I worked in the claims department, this type of light accident that resulted in injuries was always reported to the Special Investigation Unit of the claims department. If I were you, I would makes sure that your claims adjuster knows that there were no injuries claimed at the time of the accident and that the damage was very minor. From there let them investigate. If the injury is legit then it is legit, all you can do is make the claims adjuster aware of what happened at the accident scene.

      As far as estimating how much your insurance will go up, there is no information I can provide. Rate increases from accidents are never a certain percentage or amount because of how many different factors are involved in determining your insurance premium. All you can really do is not stress about it and if there is an increase you will see it on a renewal later down the road.

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