Why Have My Car Insurance Rates Increased?

When a car insurance rate increases, it’s not always due to speeding tickets, hitting a parked car, or overall reckless driving. Good drivers can also have their car insurance rates increased, which can be very upsetting and confusing for them.

Information from the Bureau of Labor shows that auto insurance costs increased by 50 percent between 2006 and 2016. The logical question is what is causing insurance rates to increase? Aside from traffic violations, other factors may influence car insurance rates. Without understanding what causes rates to increase, it can seem like your car insurance rate increases for no reason! Several factors can contribute to an increase in insurance rates. Understanding these factors can help you understand the current rates you are being charged and help you decide whether it is time to switch providers.

Possible Reasons Why Your Car Insurance Increased

Car insurance rates are typically set based on a combination of personal driving history and other factors around you that are not always within your control. Here are some of the reasons why you might notice a rate increase:

1.      Presence of Uninsured Drivers

Uninsured and underinsured drivers are a big factor that insurance companies must account for when setting prices. According to data from the Insurance Research Council, the national rate for uninsured drivers went up from 12.3 percent in 2010 to 13 percent in 2015. In 2012, “uninsured motorist claims” added up to an astounding $2.6 billion. The average cost of an uninsured claim is $20,000. As the rate of uninsured drivers increases, insurance companies take the expense created by these individuals and forward it to policyholders. Policyholders may also see an increase due to including underinsured motorist coverage to a policy as required by some US states.

2.    Increase in Medical Expenses

Accidents are on the rise due to an overall increase in road users, especially drivers. For this reason, guarantors pay out more money for every claim. Increasing medical expenses cause a rise in cost per claim, which is a possible reason why your car insurance rates might have suddenly increased.

Undoubtedly, medical cost is on the rise. According to the Centers for Medicare and Medicaid Services, national health spending may rise from 2017 to 2026 at an average annual rate of 5.5 percent. Payouts for injuries due to motor accidents increased by 6 percent in 5 years (2012 – 2017).

3.    Reckless/Distracted Drivers

The presence of reckless or distracted drivers leads to an increase in accidents. A car insurance rate increase may be due to high accident levels since it signifies more potential claims for guarantors to pay. Distracted driving is becoming more prominent as technology advances. According to the National Highway Traffic Safety Administration, in 2017, 3,166 individuals died in distracted driving incidents.

4.    High-Speed Limits

A state with a high-speed limit has an increased risk of road accidents, which means more possible claims for guarantors. If you move to an area with higher speed limits or conduct business in those areas, you might notice an increase in your car insurance rates. For example, Texas has the highest speed limit, which is 85 mph on specific segments of rural interstates.

5.    Rising repair expenses

Auto repair costs are also on the rise, which leads to higher insurance costs. As new cars come stock with more safety features to help prevent accidents, these advances also contribute to higher mechanic bills. Not only that, but according to a report from the National Insurance Crime Bureau, these additions also attract theft by individuals who intend to resell.

All of these outside factors can contribute to a rate increase along with your claims history and driving record. However, it shouldn’t be challenging to find an affordable solution. At Northeastern Group, we work with drivers in New York, New Jersey, Connecticut, Pennsylvania, Georgia, and Florida to discover the appropriate coverage that suits their needs and vehicle. Contact us today to get started.  We look forward to working with you.

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