Why Does My Car Insurance Keep Going Up? [FAQ]

The main reasons car insurance companies are forced to raise rates have nothing to do with you in particular but instead have to do with the economics of insurance. The increase in the number of accidents each year and the increase in the average cost of these accidents are forcing insurance carriers to raise rates across the board to everyone in the state. Even the largest auto insurers are reporting that their costs to cover claims are exceeding the premiums they collect.

More and more accidents happen each year because:

• More driving
  Economic growth, urban sprawl, and lower gas prices have people driving more than ever. With more cars on the road traffic is more congested and there are more accidents. If there are more accidents then the likelihood that you will be involved in one also goes up. Even if you’ve never been in an accident (yet), your chances of being in one this next year increases and, even if you are not, your insurance company will be paying out more on average and therefore your share of that cost goes up.
• Distracted drivers
  The number of accidents attributed to distracted driving in recent years is on the rise and distracted driving-related accidents tend to be more severe. It is too easy to allow ourselves to focus on something other than our driving. Whether the distraction is from in-dash tech, talking and texting on our phones, or eating and drinking while we drive, paying attention to actually driving sometimes takes a back seat. With more distractions there are more accidents and they are more severe. The insurance companies pay for these claims and your share of that cost goes up.
• Uninsured drivers
  As the cost of insurance goes up, people decide to take their chances and hope they are not in an accident. But, when you are hit by an uninsured motorist, you expect your insurance company to take care of you and fix your car. Where does the money come from to fix your car? Sure, they might recover some of the money by taking these drivers to court and getting judgments, but, for the most part, the cost of these uninsured motorist claims is spread across all policyholders.
• Acts of God, vandalism, and theft in your area
  Weather related events such as flood, wind, and hail damage may cause your insurance company to raise rates in your local area to cover anticipated claims. Increases in car theft rates for your make and model of car in particular or in your area generally can affect your rates. Both new cars and older cars can be affected. When insurance companies notice these patterns in an area, they must adjust their rates accordingly.

The average cost of an accident is going up due to:

• Higher repair costs
  We are paying more for just about everything nowadays. Vehicle repair costs are no exception. A minor fender bender if either car has to go into the body shop, can cost thousands to repair just a bumper. Part of this is due to higher labor costs but a big part is the advanced technologies built into newer cars.

  Advanced safety and driver assistance systems help keep you and your passengers safe but these systems involve complex sensors and computerized components that are expensive to repair. Forward collision sensors in windshields, sophisticated warning devices in the front and rear bumpers, back-up cameras, blind spot detectors, they get more sophisticated and common every year but when these things get damaged, even in a minor fender bender, it costs more to fix the car. Whether it’s your car or the one you hit, these extra expenses increase the average cost of an auto accident.

• Rising medical costs
  Medical costs are not going down. Car insurance companies do not get to negotiate with the hospital or doctor like your health insurance and must pay full price for your medical care. These ever-increasing medical costs multiplied by a rising number of accidents are skyrocketing the amount paid out and must be spread out among the whole pool of policyholders.
• Increased insurance fraud
  Insurance fraud can be the seemingly innocent inflating of damages after a car accident to profesional fraud rings fabricating and staging accidents. Everyone wants lower premiums and thinks the insurance company is gouging them, so claiming to be married or forgetting to mention a new driver in the household might lower your premium but not risk. When the insurance company does not collect the correct rate from a large pool of people or has to pay inflated claims, they ultimately must increase rates on all of their policyholders to cover the expense.

If you’re involved in an accident or get a moving violation ticket you expect your insurance company will raise your rates at your next renewal but there are some less obvious reasons your insurance might have gone up.

• Change In Your Credit
  Your car insurance can go up for what appears to be no apparent reason when, in fact, you have had a change in your credit. Statistically, people who do not pay attention to their bills are also not paying attention to their driving. Using credit may seem unfair to the clean driver but is it any different than your rate going up for getting a speeding ticket for 5mph over?
• Not-At-Fault Accidents
  Another factor that is hard to understand and seems unfair is when your rate goes up because someone else hit you. The insurance companies raise the rates on drivers who have not-at-fault accidents for 2 primary reasons: they are more likely to be in an at-fault-accident this next year and they are more likely to be involved in another not-at-fault accident and your not-at-fault accident costs your insurance company money that they must spread over their policyholders.

Most insurance companies believe that if you were involved in an non-at-fault accident this year, you are more likely to be involved in another accident in the near future than someone who was not involved in an accident. Even a non-at-fault accident can cost your insurance company money, between medical payments, uninsured motorist, collision coverage, and staff costs to handle all that and dealing with the other insurance company. If they don’t raise the rates of those who had the not-at-fault accidents then they would have to raise everyone’s rates since the costs have to be spread out, and spreading the increase cost over those most likely to use it again makes the most sense.

Most companies will say they do not actually charge for the not-at-fault accident. Instead they remove the claim free discount or move you to a more expensive tier within their rating system. Which to you and me means they charge for the accident no matter how they word it.

Every carrier has their own factors used to measure credit and factor accident-free discounts. We understand that bad things can happen to good people and usually when you can least afford it. By using an independent agent like Mid-Columbia Insurance we are able to shop your insurance with multiple companies and can find the one that gives you the best rate, whether your credit is good, bad, or ugly.

The main reasons car insurance companies are forced to raise rates have nothing to do with you in particular but instead have to do with the economics of insurance. The increase in the number of accidents each year and the increase in the average cost of these accidents are forcing insurance carriers to raise rates across the board to everyone in the state. Even the largest auto insurers are reporting that their costs to cover claims are exceeding the premiums they collect.

More and more accidents happen each year because:

• More driving
  Economic growth, urban sprawl, and lower gas prices have people driving more than ever. With more cars on the road traffic is more congested and there are more accidents. If there are more accidents then the likelihood that you will be involved in one also goes up. Even if you’ve never been in an accident (yet), your chances of being in one this next year increases and, even if you are not, your insurance company will be paying out more on average and therefore your share of that cost goes up.
• Distracted drivers
  The number of accidents attributed to distracted driving in recent years is on the rise and distracted driving-related accidents tend to be more severe. It is too easy to allow ourselves to focus on something other than our driving. Whether the distraction is from in-dash tech, talking and texting on our phones, or eating and drinking while we drive, paying attention to actually driving sometimes takes a back seat. With more distractions there are more accidents and they are more severe. The insurance companies pay for these claims and your share of that cost goes up.
• Uninsured drivers
  As the cost of insurance goes up, people decide to take their chances and hope they are not in an accident. But, when you are hit by an uninsured motorist, you expect your insurance company to take care of you and fix your car. Where does the money come from to fix your car? Sure, they might recover some of the money by taking these drivers to court and getting judgments, but, for the most part, the cost of these uninsured motorist claims is spread across all policyholders.
• Acts of God, vandalism, and theft in your area
  Weather related events such as flood, wind, and hail damage may cause your insurance company to raise rates in your local area to cover anticipated claims. Increases in car theft rates for your make and model of car in particular or in your area generally can affect your rates. Both new cars and older cars can be affected. When insurance companies notice these patterns in an area, they must adjust their rates accordingly.

The average cost of an accident is going up due to:

• Higher repair costs
  We are paying more for just about everything nowadays. Vehicle repair costs are no exception. A minor fender bender if either car has to go into the body shop, can cost thousands to repair just a bumper. Part of this is due to higher labor costs but a big part is the advanced technologies built into newer cars.

  Advanced safety and driver assistance systems help keep you and your passengers safe but these systems involve complex sensors and computerized components that are expensive to repair. Forward collision sensors in windshields, sophisticated warning devices in the front and rear bumpers, back-up cameras, blind spot detectors, they get more sophisticated and common every year but when these things get damaged, even in a minor fender bender, it costs more to fix the car. Whether it’s your car or the one you hit, these extra expenses increase the average cost of an auto accident.

• Rising medical costs
  Medical costs are not going down. Car insurance companies do not get to negotiate with the hospital or doctor like your health insurance and must pay full price for your medical care. These ever-increasing medical costs multiplied by a rising number of accidents are skyrocketing the amount paid out and must be spread out among the whole pool of policyholders.
• Increased insurance fraud
  Insurance fraud can be the seemingly innocent inflating of damages after a car accident to profesional fraud rings fabricating and staging accidents. Everyone wants lower premiums and thinks the insurance company is gouging them, so claiming to be married or forgetting to mention a new driver in the household might lower your premium but not risk. When the insurance company does not collect the correct rate from a large pool of people or has to pay inflated claims, they ultimately must increase rates on all of their policyholders to cover the expense.

If you’re involved in an accident or get a moving violation ticket you expect your insurance company will raise your rates at your next renewal but there are some less obvious reasons your insurance might have gone up.

• Change In Your Credit
  Your car insurance can go up for what appears to be no apparent reason when, in fact, you have had a change in your credit. Statistically, people who do not pay attention to their bills are also not paying attention to their driving. Using credit may seem unfair to the clean driver but is it any different than your rate going up for getting a speeding ticket for 5mph over?
• Not-At-Fault Accidents
  Another factor that is hard to understand and seems unfair is when your rate goes up because someone else hit you. The insurance companies raise the rates on drivers who have not-at-fault accidents for 2 primary reasons: they are more likely to be in an at-fault-accident this next year and they are more likely to be involved in another not-at-fault accident and your not-at-fault accident costs your insurance company money that they must spread over their policyholders.

Most insurance companies believe that if you were involved in an non-at-fault accident this year, you are more likely to be involved in another accident in the near future than someone who was not involved in an accident. Even a non-at-fault accident can cost your insurance company money, between medical payments, uninsured motorist, collision coverage, and staff costs to handle all that and dealing with the other insurance company. If they don’t raise the rates of those who had the not-at-fault accidents then they would have to raise everyone’s rates since the costs have to be spread out, and spreading the increase cost over those most likely to use it again makes the most sense.

Most companies will say they do not actually charge for the not-at-fault accident. Instead they remove the claim free discount or move you to a more expensive tier within their rating system. Which to you and me means they charge for the accident no matter how they word it.

Every carrier has their own factors used to measure credit and factor accident-free discounts. We understand that bad things can happen to good people and usually when you can least afford it. By using an independent agent like Mid-Columbia Insurance we are able to shop your insurance with multiple companies and can find the one that gives you the best rate, whether your credit is good, bad, or ugly.

Even though there are a number of factors that are out of our control which contribute to increased car insurance premiums, the good news is that there are plenty of things you can do to lower your car insurance premium.

• Choose a higher deductible.
  Choosing to have $1,000 comprehensive and collision deductibles instead of $250 or $500 deductibles will immediately lower premium. It may also keep your rates low because having a higher deductible prevents you from turning in small claims and losing your accident-free discount. You will have to decide if it is more beneficial in the long run to pay for a small claims like replacing a broken windshield or paying more so you can turn it in to your insurance company.
• Enroll in the insurance company’s telematics program
  Insurance company telematics programs, like Safeco’s RightTrack™, Progressive’s SnapShot™, and State Farm’s Drive Safe & Save™ are becoming more and more popular. These programs collect information about how you drive, how much you drive, and when you drive. The insurance companies then use this data to personalize your car insurance rate based on your actual driving data. Your safe driving habits could save you up to 30% off your premium.
• Bundle and save
  Most insurance companies offer a multi-policy discount when you insure your home and auto with them. Some will even give a discount if you insure your motorcycles, boats, or RVs with them. This discount can be as high as 25%, so it makes sense to have as many of policies as you can with the same company.

There are a number of things you can do to make sure your rates stay as low as possible.

• Drive carefully
  Observing traffic rules and speed limits and avoiding moving violations and accidents is the best way to reduce your insurance costs over time. Anymore even a not-at-fault accident may raise your rate because companies have seen drivers who are in 1 accident are more likely to be in another (at-fault or not).
• Move
  Yes, probably not an option, but just realize where you live affects your insurance price.
• Work with an independent insurance agent
  There is no one-size-fits-all solution when it comes to insurance. Unlike a “captive” insurance agent that works with just one company (think State Farm, Farmers, Allstate, Geico, etc), independent agents partner with a wide range of insurance companies. This means we can find the best combination of price and coverage for you. Insurance pricing is based on hundreds of variables and can vary dramatically from company to company.

Rates seem like they will continue to rise in the foreseeable future. If the loss-causing trends continue, we will continue to see premiums go up each year. We can only hope and do our part to help these trends reverse.

The best way to save money on insurance is to shop around and find an agent that not only offers great rates but can offer sage advice on how you can protect yourself from potential claims. As an independent agent, we can compare quotes from a number of companies to ensure you’re getting the best car insurance possible.