5 Signs You’re in for a Massive Auto Insurance Spike

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auto insurance spike

Whether you’re looking for auto comprehensive insurance or need liability auto insurance coverage, shopping around can help you get the best rate on your insurance premiums, even if you’ve been with the same company for years. Many drivers are realizing just how much they can save by taking the time to compare insurance policies online.

Insurance Premium Fees: The Ups and Downs

While you may be a good driver, practicing safe driving and obeying all road signs, your insurance premiums could still rise. This doesn’t exactly scream FAIR does it? Insurance premiums can spike or fall depending on any number of factors. To understand these changes, you must first understand how insurance providers are a company, and to make a profit, they need to charge for their services.

Where Does the Money Come From?

Insurance companies make money when they don’t have to pay out money in customer claims. Paying out an insurance claim costs your insurance agency just like it costs you. One way to combat this is by practicing good driving habits. Insurance companies will only charge you hefty premiums if they have determined that you are a liability risk.

Why Your Premiums Increase

As mentioned above, your car insurance premiums will increase when your insurance provider has declared you to be a risk. There are several factors that can contribute to this:

Investing in a new car

If you have bought a new car, you can expect to pay higher rates for your insurance premium. Why? Issues of theft, vandalism, engine size and even the make and model of your new car can rate poorly in insurance statistics. If your vehicle is found to have any problems with the aforementioned, your insurance company will want to make sure they don’t lose money insuring you.

Bad credit score

Your credit score affects your car insurance premiums. The 2016 Car Insurance and Credit Scores Report study revealed that premiums fluctuate depending on credit scores. People with poor credit can pay up to 50 percent more than if they had a good credit score.

It’s advised that motorists pay off any debts or loans to help improve their credit score. Some insurance companies have been known to discount premiums to policy holders by over 50 percent if they show evidence of excellent credit scores.

Accidents, tickets and other violations

Have you had a brush with the law? Have you had to file a claim on your insurance? A recent study showed that car insurance premiums can rise by as much as 44 percent after a motorist has filed a single claim. Violations such as traffic tickets or car accidents will make your insurance provider perceive you as risky, increasing your rates.

In order to rein in the rising premiums, you may have to increase your deductible or change insurance providers. Some motorists choose to have liability auto insurance coverage to crack down on insurance costs.

Changing your zip code

Highly populated cities are considered an insurance liability. Cities are found to have higher incidents of accidents, such as in Baltimore, Boston and Washington D.C. If you move to an area considered high risk by the insurance provider, you will pay more on your insurance premiums.

Increasing your commute

You may have decided to move to a different town or may have changed workplaces. An increased commute will be reflected not just as an increase in fuel prices but also as an increase on your premium. Insurance companies consider you at greater risk of an auto accident if you are on the road more frequently and for longer periods of time.

The bottom line is that insurance rates are influenced by several factors. Understanding how these factors affect your insurance rates will help you keep your premiums from rising.

This post is brought to you and contributed by Audrey Hobbs.

2 thoughts on “5 Signs You’re in for a Massive Auto Insurance Spike

  1. Amanda @ centsiblyrich

    Great list! Another sign you will see premiums increase is having a teen driver. Even after shopping for lower rates, our premiums went up $800/year when our son started driving. And we have another starting to drive in a year. Ugh!


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