You assume that the rates charged for a policy purchased online are fixed and will not change once you have paid them. Surprised to discover an increase in premium when you renew your policy? Rate fluctuations are possible at every renewal. While the rate change might be small or significant, there is always the possibility of substantial changes. These increases should be understood. There is a possibility that the carrier made a mistake. If you are not sure about the hike, it is best that you contact your carrier. These changes could be due to one of the following reasons:
- Traffic Violations These can lead to drastic changes, such as an at-fault car accident or traffic tickets. This is an indication of your negligence. Your carrier notifies you of your negligence and declares you a risky driver. Rates will rise if your risk is greater. In the reverse situation, rates will also increase. If you are careful, your rates will decrease. Many carriers offer the option to forgive your accident costs. To be eligible for this option, you must meet the prerequisite of having no accidents during a specific time period. Rates will not be affected by accidents if these conditions are met.
- Addition of New vehicle will also increase your rates. This will vary depending on vehicle value and model. Your premium will rise with every addition. Higher risk vehicles like flashy or sports cars are more common. The main reasons are (1) Sports car – prone to be driven faster on road (2) New car – higher value and hence higher repairing costs (3) flashy car – similar to sports car. If you’re looking for lower rates and less drawbacks, a modest car may be a better choice.
- State laws are changing will change your premiums with no fault at your side or the carrier’s side. Due to statistics regarding the cost and extent of accidents, the state laws may be modified from time to time. The state will announce an increase in coverage if the average cost rises beyond what is currently required. This could be due to an increase in medical or auto parts costs. Inflation or increases in wages and supplies could cause these costs to rise. All of these factors can have an impact on the policy.
- The amount of risk each driver poses to auto insurance companies and the need for funds to pay them will influence their decisions. To balance the situation and to maximize their profits, companies will increase rates when there are more inflows than inflows. As a result, the number of uninsured claim increases. The company is responsible for all accidents and you don’t need to pay out of pocket if you have a policy that includes uninsured/underinsured motor vehicle coverage. The company’s liability may increase if there are too many claims over a period of time.
- The Change There are many drivers on your policy will also lead to a change in your policy rates. Your rates may change if you add a driver to your policy. This is based on the driver’s risk and the coverage he has. Rates will rise if the driver is inexperienced or young. Your rate will drop if you remove a driver. However, this decreases the possibility of the carrier using your money. The driver who was removed from driving must take out a new policy if he wants to continue driving. It will not be the same if he was not the primary driver (person driving the majority of the driving) before he takes over the policy. This is especially true when he is young or inexperienced.
These are the main reasons for policy rate increases. You have the power to decide whether you will obey state laws and what vehicle you want to use. All of these decisions are yours. The other two are out of your control. You can only control the variables that affect your premium rates.