Car Insurance Shopping: Why Rates Can Go Up After You Buy


You find a great rate and you purchase the policy. When you receive your paperwork in the mail…

“Hey, that’s not the rate I was quoted!”

Everyone thinks the same thing when it happens to them: “it’s just a bait and switch.” I’d think the same thing if I weren’t in the industry. The agent quoted you a rate but the policy you received in the mail contains a different 6-month rate.

It’s not necessary to call the department for insurance right away. It’ll be a waste and a waste of your time. But why?

It’s simple. They updated your rate because the company didn’t have all of the information that was evaluated by their underwriting team at the time that you bought the policy.

What?! What?!

This question has many answers, depending on whether you bought the policy online, the information on the quote and the circumstances that led to the increase. So, I will concentrate on the most common suspects.

#1: The application did not contain enough information.

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Insurance companies have access to a lot of information electronically. This includes your driving record, household members, current insurance, your vehicle’s financing, your homeowner status, and other pertinent information.

These reports are often relied upon too heavily by many consumers, especially their driving history. Depending on which company you purchased the policy from, they may have received your Motor Vehicle and Claims History Reports when you were purchasing the policy. If additional violations or claims are discovered after the reports have been reviewed, they can be referred to the appropriate department. Your rate will adjust accordingly.

Rate increases immediately after buying a policy are caused by the assumption that all reports were collected at the time of purchase.

#2: The information entered on the application was incorrect.

Another possibility is that the applicant submitted incorrect information, possibly unintentionally.

Many consumers don’t realize the impact that each question on their car insurance application has upon their rates. Every question is vital, so don’t guess. Even something small, such as how long you’ve been insured continuously, could lead to an increase in premiums when the insurance company reviews the reports.

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When it comes to accurately filling out an application, the main pitfalls consumers face are their driving record, current insurance information and all relevant drivers.

#3: Important paperwork wasn’t completed or returned on time

After you have made your down payment, signing up for your policy is not complete. You may have made a few decisions when setting up your policy. These choices could have required you to complete a form. The insurance company will mail these to you in your application package if you have not completed them in an agent’s offices. They will amend your policy if they don’t receive them. Signing forms are required in certain situations, such as driver exclusions or coverage selections.

Your insurance company might also ask for proof, such as your previous insurance or discounts. Not all insurance policies are able to be electronically verified. Pay attention to the instructions. what documentation is acceptable. Your policy premium may be affected if they fail to receive the proof in time or if the information they receive is incorrect.

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These rate changes do not happen immediately. These rate increases may not be visible for up to a month after your policy was initiated due to paperwork processing time.

So how can I make sure that the rate I receive is exactly what I was quoted?

  1. All information should be entered by you from the beginning. Do not wait for the company’s reports to be completed. Don’t guess if you don’t know the answer to a question. Instead, ask. This will save you time, and it will also help you avoid headaches by getting a quote right from the beginning.
  2. Complete and return the paperwork as soon as possible. It is less likely that you will forget to complete the paperwork if you do not respond immediately. Be sure to read all mail and emails sent by your insurance company. You may be able to sign paperwork online with some carriers.
  3. For your new policy, choose a start date (also known as your effective date) that is between 10 and 14 days away. The policy will become effective a few more days after you make the payment. Why? You have the option to wait for your insurance company to verify your information before you cancel your existing coverage. If your rate changes and you feel it is not a good deal for you, you can cancel the policy and keep your old one. Many companies also offer discounts for future purchases. The more discounts you get, the better. FYI: You will not be charged cancellation penalties if you ‘flat cancel’ the new policy (meaning that it never took effect).

These increases can’t be avoided.

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You cannot, for one simple reason: credit. Your credit score is interpreted by insurance companies solely based on electronic reports. You cannot enter this information on an application. If the credit system is not working at the time that you purchase the policy, they will order it again and adjust your rate accordingly.