Why do auto insurance rates go up?
OH NO! My auto insurance premium went up…WHY?
No one likes to pay more for their car insurance. And you probably want to know why your rate increases from time to time. If your insurance company finds certain criteria on your driving record that was not disclosed on your application, your rate might go up. Also, if you were found at fault for an accident, your rates can increase. No one likes paying more, so we will explain why your premium might need to be adjusted after your policy is issued, or on a policy renewal date.
Quotes vs. Actual Rates
When you complete an application for insurance, you will be given a quote based on the information you provide to your agent. Sometimes you might forget about that minor accident you caused a couple years ago, or that moving violation. After completing your insurance application, the insurance company has access to you Motor Vehicle Report (MVR) and other exchanges that report your driving and claim history. If there are differences from what you provided on your application, the insurance company will need to adjust your premium based on the facts found in the reports.
Why actual rates can be higher than quotes
Did you have a sudden price increase? There are usually two reasons for this…data that was missing on your application, or discrepancies such as a recent ticket or accident.
Mismatching info
Your insurer verifies the information you provided when you got your quote. If any discrepancies turn up, like an at-fault accident that wasn't reported or a recent speeding ticket, your rate could be affected.
Omitted data
Sometimes you will not feel comfortable giving your social security number or other information when you request an insurance quote. If you leave your social security number off your quote, your final premium could be different from the quoted price. Omitting things like DUIs or other tickets can drive a rate increase when these situations are discovered.
Other costs
Sometimes there are installment fees depending on how you choose to pay your premium (ex, monthly). In various states, there may be state-specific fees that might increase your final premium. With some insurers, you can choose to pay for your policy in full, and you will benefit with a discounted premium.
Your premium can go up after your policy is issued
With most insurers, your rate could increase in the first couple of months after you buy your policy if you don't submit required forms or if there is an undisclosed accident or other finding on your MVR.
You might be asked to submit proof of prior insurance to certify that you have had continuous coverage for as long as you indicated. If this is the case, the insurance company that issued your policy will notify you of all requirements.
Also, your state may require you to submit proof of health insurance in order to maintain lower medical coverage limits.
In certain situations, if the information the insurance company is not correct, you will still be able to submit forms after a rate increase to get your premium restored to its original level.
Your policy is coming up on anniversary… can your premium change?
If you see a higher premium, it is most likely the result of:
- Accidents- You have reported a claim that results in a re-rating of your policy based on the incident that was reported
- Violations- Moving violations might cause your rate to change
- Lapsed discounts- Some companies offer discounts when a policy is purchased. An example would be a claim free discount. When an accident occurs, this discount would no longer be provided and your premium will increase
- Did you move? If you move to an area classified as a high theft or accident risk area, your renewal premium might reflect this move and your premium might increase.
- State rate plans- Sometimes all drivers insured will be granted a new plan premium increase based on their overall experience and this would affect everyone’s premium. These rates would have to be approved by each State Insurance Department before they are passed along to the insured.
In summary: It is to your advantage to disclose all of your driving information to avoid frustration and incorrect quoting from the start
