Why Did My Auto Insurance Rates Change?

Auto Smarts

You probably expect your insurance rates to change if you've gotten speeding tickets or had at-fault accidents. But rates can change even when you have great credit, a flawless driving record and haven't ever filed a claim.

Why? The price you pay for auto insurance depends on unique personal variables that can change from year to year. Some factors, such as the car you drive or how much coverage you purchase, are within your control. Others, like your age or the cost of repairing your car if it's damaged, aren't.

So if you're wondering why your rates went up or down, consider these possibilities:


Changes In Your Policy

Even making a minor change to your policy can affect your premium. While raising your deductible may lower your premium, for instance, adding another vehicle or another coverage like towing and roadside assistance might cause it to rise.

If you altered your payment plan, meanwhile, you may have gained or lost a discount in the process which will affect your premium.


Changes In Your Driving Record

Statistics show that an at-fault accident increases the odds that you'll have another within the next three years. Many companies adjust insurance prices to reflect the added risk during this period of time, but you'll typically pay far less in added premiums than it would cost to settle your claim without coverage.


Changes In Your Life

Life events can change the way insurance companies evaluate risk:

  • Moving: It's more expensive to insure a car in crowded cities than in rural areas, but accident rates vary even by ZIP code – simply moving from one area of a city to another can affect the price of your insurance.
  • Birthdays: Studies suggest that individuals are more likely to have an accident toward the beginning and the end of their driving careers, so getting a year older could be a factor in lower or higher insurance rates.
  • Weddings: Data suggests that married people are less likely to cause accidents than single people, so tying the knot might lower your insurance bill.


Changes In Your Costs

External factors beyond the control of consumers or insurance companies also influence the price of your coverage:

  • Advanced technology: Expensive new features keep you safer, and lightweight aluminium bodies improve fuel economy, but both increase the cost of repairs after an accident.
  • Strong economies: With high employment rates and low gas prices, people are driving much more and accident rates have risen – increasing the risk for even the best drivers.
  • Inflation: The overall rate of inflation is low, but the cost of materials used to repair cars and medical care continues to go up over time.


Farmers strives to charge a fair price that accurately reflects each aspect of your risk profile; we also work to maintain stable pricing by negotiating rates with vendors, fighting fraud and opposing regulations that increase our costs.


Auto Insurance Myths


Myth #1: Insurance should cost less because cars have gotten safer.

The technology making cars safer also makes them much more expensive to repair. And it will be some time before autonomous driving systems are widespread enough to reduce injury and fatality rates that have risen as a greater number of cars are driven a greater number of miles.


Myth #2: Insurance companies raise prices to make more money.

Insurance companies set prices that closely match what they expect to spend in claims and expenses. In some areas where the accident rate and claims costs have risen dramatically, many companies don't make any profit from premiums, and are raising rates to lose less money.


Myth #3: My car should cost less to insure as it gets older.

The majority of an auto insurance premium pays for liability coverage—in other words, what it will cost to repair the other car and provide compensation to people involved in an accident. Also, older cars have fewer safety features, are made of heavier materials that cause more damage, and require unique skills to fix, or have parts that are harder to find.


Myth #4: Insurance companies will raise my premium to recover money spent on my claim.

This is against the law. An insurance company cannot charge you for the money it spent to settle a claim. However, accident history is predictive of future accidents, which is why many insurance companies may surcharge your premium for a few years following a loss that you caused.


Myth #5: If I didn't cause the accident, my insurance company won't have to pay for any damage to my car.

This isn't always true. In some states, if your policy includes coverage for damage caused by uninsured/underinsured motorists, and the person responsible was either unknown or underinsured, your insurance company may end up paying for repairs. If you live in a no-fault state, your company will pay for damage to your car because it pays for those repairs regardless of fault.


Myth #6: I should only have to pay for insurance when I need to make a claim.

Purchasing auto insurance is a way to share risks with other people like you. Everyone contributes relatively small amounts so that no one faces catastrophic out-of-pocket expenses when the unexpected happens.

 

The information contained in this page is provided for general informational purposes only. The information is provided by Farmers and its partners, and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.