When it comes time to renew car insurance policies, it’s not uncommon to learn your premium will be higher than it was during the previous coverage period. It can be understandably frustrating when auto insurance rates rise seemingly without justification. Rates are subject to change at the insurance companies’ discretion, and each insurer has its own method for calculating rate increases and decreases.
While suddenly increased car insurance rates may seem like a mystery to the average consumer, in actuality, they’re derived from complex formulas meant to mitigate risk to the insurance carriers. Drivers and vehicles associated with factors linked to a higher probability of costly claims will be subject to higher insurance rates.
Although sometimes even seasoned insurance agents, like those at O’Brien Insurance, are unable to decipher the reasoning behind substantial rate changes, they make a point of contacting insurance companies in these instances for more details. Below are some of the more common root causes of auto rate increases that O’Brien agents encounter and some suggestions of what you can do to keep your rates down:
Cause #1: Distracted Driving
Distracted driving- whether due to texting, phone calls, on-the-go eating, or another bad habit typical of our multitasking lifestyles- is the leading cause of more claims being paid out by car insurance companies. The more claims an insurance carrier has to pay for, the more likely they’ll have to increase rates.
Cause #2: High-tech features
Cutting-edge features are a highlight of driving a newer-model vehicle. Amenities such as automatic doors, lights, and windshield wipers and push-button starters define convenience, while advanced safety features- backup cameras, lane assist, and a host of other sensors to help decrease your odds of getting in an accident- allow us to feel secure on the road. But replacing costly high-tech parts, along with increased labor costs associated with needing highly-skilled, well-trained technicians to make the repairs, can drive up insurance rates.
This is probably the easiest-to-understand driver of rising insurance rates. The more claims you or other drivers listed on your policy have on your insurance record, the more likely you are to experience a rate increase. Drivers prone to accidents, and therefore, to submitting claims, are a higher risk to insurance carriers. Raising premiums for these drivers allows the insurance company to balance out its risk vs. benefit profile.
So what can you do?
It’s important to keep in mind that there are circumstances beyond consumer control impacting car insurance rates. State policies around auto insurance requirements, population increases, and rising auto manufacturing costs contribute to rate increases, and there’s not much we as individuals can do to change that. However, there are a few steps we can take to help keep our car insurance rates down:
- Drive safely and without distraction. Being thoughtful about your individual driving behaviors is your best chance for keeping your auto insurance rates from rising because it reduces your likelihood of getting in an accident. Not only will avoiding accidents help to avoid rate increases, but many insurers also offer discounts for drivers with few accidents in their history.
- When it comes time to lease or own a new car, choose an insurance-friendly vehicle. It can help to compare insurance rates for different vehicle makes and models. Those that would cost less to repair or replace in the event of a claim will likely come with lower insurance rates.
- Take a defensive driving course. Many insurers offer discounts for consumers who make an effort to become safer drivers. Reducing rates for those who participate in a defensive driving course is a common example of this practice.
O’Brien Insurance is Here for You
As always, O’Brien Insurance agents are here to help you navigate the sometimes complex world of insurance. Contact them today for guidance with your car insurance policy and all of your other insurance needs!