You haven’t filed any claims. You have a clean driving record. You haven’t made any changes to your liability limits, deductable or coverage. Yet you receive notification right before renewal that your auto insurance rates are increasing.
Let’s face it. Trying to stay on top of your auto insurance rates can be a huge pain – even when you’re doing everything right.
Guess what? You’re not alone!
There are so many people who go through this each and every year. Go ahead, do what comes natural … stand right up and shout it out … “WHYYYYYYYYYYYYYYYYYYYY????????!!!!!!!!!!!”
Whew! Glad we got that out of our system!
So, what now?
Well for starters, consider today your lucky day! While this question can bring much frustration, we do have answers for you. Let’s unpack the possibilities …
Possible reasons for insurance rates increases
1. Increased claims in your area
When storms come and wreck havoc in your neck of the woods, claims will be made by others in your area. And let’s face it – we live in Kansas where wind and hail will inevitably hit somewhere. Every. Year.
Even if you’re one of the lucky ones who escape damage, the companies providing insurance coverage still may have increased payouts to others in your area. When payouts are higher than they expect, the costs roll over to everyone in the area.
2. Loss of discounts
Often times, insurance companies will offer a special discount to new policy holders. When it comes time for renewing your auto policy with that company, guess what – you’re no longer considered a new account holder and you lose that discount.
The multi-policy discount is another popular one. If you choose to place your home and auto insurance with different companies, you could lose that discount. The same is true if you sell a vehicle so that only one vehicle remains on your policy.
3. Moving to a different ZIP code
It’s pretty well known that insurance rates vary from state to state. But did you know that moving to a different ZIP code in the same town could also cause a hike to your insurance premium?
If you move to a ZIP code with higher rates of vehicle theft and vandalism you could see an increase. The same is true if there is a higher population in that area because it correlates with more vehicles being on the road and in turn, an increased possibility of accidents.
4. A decrease to your credit score
We’ve heard this question a few times, “What does my credit score have to do with my driving record?”
We’re not here to take sides on whether or not there’s a connection. We just want to relay the facts. And the fact is that insurance companies do use your credit score when determining your insurance premiums.
So if your credit score dropped over the past year, it could translate to an increase in your insurance premium.
5. Rising repair and medical costs
When was the last time you had to take your vehicle into the shop for a repair? Even minor repairs can leave you with a hefty bill. Now consider the cost of new technology in modern vehicles – it can be very expensive to repair a car or truck that’s been in an accident!
And then what happens when someone gets injured in an accident? If you’ve been to the doctor recently, you know that health care costs are also on the incline.
Insurance companies factor all of these rising costs into their premiums. Just like any business, insurance companies want to be profitable. When their costs rise, they pass on those increases to their policy holders. It’s no different than your favorite restaurant increasing the price of your meal because their cost for food also went up.
6. Distracted driving increases
This one ties into #1 above where we discussed increased claims in your area.
There has been a steady rise of distracted driving across the nation. In fact, the National Highway Traffic Safety Administration reports that in 2017 alone, 3,166 people were killed in vehicle accidents involving distracted drivers. This doesn’t include the number of related injuries.
This is cause for concern for both insurance companies and their policy holders. As you’re probably aware, increases in distracted driving will lead to more collisions, which will lead to more claims.
And the result?
You guessed it … increased premiums for everyone.
So what is one to do when you can’t control all of these outside factors that effect your rates? Grin and bear it?
Take action for lower premiums!
1. Call your independent insurance agent
Yes, you heard right. You can take action with a simple call to your independent agent. In case you didn’t know … that’s us! As an independent agency, we have access to multiple insurance companies, so we can shop rates for you.
While rates may go up with one company, another company may offer discounts or have better options overall for a policy holder like you. As your independent agency, we can compare rates with some of our other company-partners and advise you on your options.
2. To bundle or not to bundle?
We’ve all heard the ads … “Bundle and save!”
It is a great option for many people. Most insurance companies do offer a discount when you place more than one policy with them, for example, your home and auto insurance. Some companies will apply multi-policy discounts when you insure more than one vehicle or add renters insurance and even boat or RV insurance to your policy.
There are also times when bundling costs more. For example, Company A has great rates for your vehicles, but their home insurance rates are significantly higher than the competition. Even with a multi-policy discount, your rate could still be higher bundling with Company A compared to keeping your vehicles with Company A and moving your home insurance to Company B.
This is another great reason to review all of your options with your independent insurance agent.
3. Payment options
Consider paying your car insurance premium in full. This can save you money because it makes the insurance company’s job easier since they only have to process one payment instead of multiple payments. Some companies call it a discount, while others will apply monthly service fees each time a payment is made.
Speaking of payments … many companies offer a discount when you sign up for EFT (electronic funds transfer). When you authorize this, the insurance company will automatically deduct your payment from your checking account at the same time every month. It’s easier for the company to process and there’s a better chance they’ll get paid and paid on time.
4. Safety features
Many insurance companies offer discounts for various safety features like anti-theft devices.
Several companies also offer safe driver discounts for people who install a telematics device in their vehicle. These devices track things like speed and hard breaking to give the company an idea of how safe of a driver you are. These devices aren’t for everyone, so depending on your driving habits, this may or may not be an option.
If you’ve experienced a rate hike, don’t worry. You still have options!
Contact our team to identify new opportunities to maintain your coverage and lower your premium. Our goal is to always provide you with the best service, pricing and coverage for all of your insurance needs.