There’s a lot more that goes into your car insurance premium than just having a clean driving record. Certain changes in your life outside of having an accident can cause your insurance rates to spike. If you have seen your premiums go up for apparently no reason, there may be an outside factor causing your insurer to hike prices.
Here are 3 possible reasons your car insurance has gone up.
Where you park your car at night is a huge determinant in your auto insurance rates. The insurance companies look at data for your neighborhood regarding break-ins, collisions and other factors that determine your rates. Just because the neighborhood seems nice doesn’t mean that you don’t have a high number of drunk drivers for neighbors or that your area isn’t a target for petty thieves breaking into cars at night.
Obviously, you will do everything you can to avoid being in an accident, but you can’t control what those around you do. If your neighbors aren’t so careful about their driving habits, your rates can be affected. This goes back to the concept of risk.
Insurance companies charge you based on the likelihood of you submitting a claim. They look at everything in your life, including your address, to determine your risk. That means that if you live in a neighborhood full of bad drivers, your insurer may decide that you could be a bad driver too and increase your rate.
You Changed Your Car
Every car has an accident rate score and a theft rate score. If you purchase a sports car like a BMW 328i for example, odds are your insurance premium will increase. Likewise, a Honda Civic may be costlier to insure since they are stolen so frequently.
You may still be the same driver with zero accidents and zero tickets. You may still be living in the same zip code in the same house. You may still drive the same number of miles per year. Yet still, changing your vehicle can have an adverse impact on your insurance rate.
Before deciding on a car to buy, you should contact your insurance company and ask them how your rate will change. If you’re debating between two cars to purchase, you may be swayed into getting the one with the lower insurance premium.
Your Credit Score Declined
If you experience a decline in your credit rating, your problem may be compounded by having your auto insurance rates go up too. By now you know that your credit score impacts pretty much everything in your life. It can get you denied from a job, renting an apartment and of course from getting a car or a home loan.
But increasingly auto insurance companies are monitoring your credit score and adjusting your rates accordingly. If you commit a financial faux pas and ignore a few credit card bills, it could not only hurt your credit but also negatively impact your insurance premiums. Credit is considered a marker of responsibility, so those with bad credit are usually judged to be more reckless, as a bigger risk and thus more likely to drive in a reckless manner.
There is no such thing as an arbitrary increase to your car insurance rates. If your premiums have gone up recently, one of the 3 reasons above is probably the culprit. Your absolute best defense against overpaying on car insurance is to periodically shop around and see if there’s anything cheaper out there. Don’t let the insurance company be in the driver’s seat – beat them at their own game and take control of your rates.