There are many reasons why premiums for auto insurance increase. This is because some companies or agents didn’t provide enough information when you bought the insurance. These are the main causes of an increase in premium fees.
1. Driving Records – The Obvious
Your driving record is a key factor in determining the premium you pay for car insurance. The DMV will document any traffic offense or accident that you have been involved in. They will keep these records for up to five years, depending on your state’s laws. Your premium fee will likely increase if the insurance company checks your driving record on renewal. An insurer can consider you a careless driver and charge you more for the coverage you buy. There are two types of traffic violations: minor and major. Minor violations include speeding or failing to obey traffic lights/signs. DUI (Driving under Influence), drag racing and other major violations are all possible. Some states offer driving courses that can help you avoid a premium increase, if you pass your test. If possible, you can also purchase forgiveness for minor violations from your insurers. For minor offenses, forgiveness from most insurers is not possible.
2. Aging
You will also need to pay more as you age. When you turn 50, insurance companies offer discounts. According to the NHTSA (National Highway Traffic Safety Administration), older drivers aged 64-69 are considered safer. The premium will increase as you age to 70. This makes sense as older drivers may find it more difficult to see, hear and react while driving. Your driving skills may decline as your physical abilities decrease. Insurance companies treat elderly customers in the same way as teenagers who are less skilled, which makes them more susceptible to accidents. Your insurance premium will rise as you approach your 70s.
3. Credit Score
Car insurance companies may still consider customers’ credit ratings when determining their premium fees. This means that insurance rates are usually higher for those with poor credit ratings. It is simple: If you have poor credit ratings, it is likely that you have missed your mortgage or credit card payments. Insurance companies see you as a less reliable customer based on this conclusion. Insurers see poor credit as a sign that you may not pay your insurance premium soon enough. Although there is no strong link between insurance bill payments and credit scores, some companies continue to use this method. It is controversial to use credit scores in determining insurance premium. Some states strongly oppose this practice. Some insurers will do this while others won’t. Always ask your agent if any auto insurance company still offers the policy. Your credit score will drop and insurance rates will go up if it does. You can switch insurance companies to find another one that doesn’t use this practice.
3. New address
It can be a thrilling experience for your family and your car insurance company to move into a new home. You usually gave information about your home address when you signed up for your insurance company. The company can use this information to predict how much you drive each year, and whether your daily route is safe. Your insurance company may also ask for more money if you travel more each day from your new address. You are more likely to be involved in accidents on the roads the more you spend time on them. There is no clear explanation as to how insurance coverage and annual mileage are related. Before you sign up, it is best to speak with your agent about this matter. You can request a lower rate if your driving record is less than 100 miles.
