Why Did My Car Insurance Go Up? — Common Reasons

Does that renewal bill for your insurance look a little higher this time around? You're not alone. Every year, drivers across the U.S. experience increased insurance premiums — sometimes for blatantly obvious reasons (such as a speeding ticket) and sometimes for seemingly no reason at all.

Fortunately, there is indeed a method to the madness behind car insurance costs, and there are many causes behind rates increasing from year to year. In this guide, we'll cover a few common reasons car insurance rates can go up, including moving, environmental risk factors, and even age.

Moving/location

It might sound strange, but moving is a common reason to see a rate increase. Because insurance companies tend to calculate premiums based on ZIP code, you might pay more (or less) after making a big move.

Car insurance rates for ZIP codes are calculated based on risk. The risk being assessed is primarily that of an accident or vandalism, which is why people in big cities typically pay more for car insurance than drivers in the suburbs.

Some states also charge far more for insurance than others. For example, Louisiana has consistently ranked as one of the most expensive states for car insurance. Far from being an overly dangerous place to live, this state is known for its poor road conditions and surplus of lawsuits. All of this translates into insurance agencies requiring residents to pay more for their auto insurance policies.

If moving changed your proximity to work, this could also be a reason for a premium increase. Driving longer commute distances is seen as a higher risk by insurance companies, and they'll raise your premiums to cover that.

But moving isn't just a risk factor in the sense of more traffic or exposure to potential break-ins. It can also simply be a matter of your new neighborhood's local laws and road quality.

Credit score changes

Credit scores matter in some unexpected ways. They aren't just used by big banks to determine your eligibility for a loan; they're also used by auto insurance companies to predict the likelihood of you filing a claim. Many insurance companies, including the big ones, use your credit score to create what's called an insurance score. A credit-based insurance score is often directly tied to your car insurance rates, although it's never the only determining factor for what you pay.

Why does your credit matter? Research has shown that people with higher credit scores are less likely to get in accidents or file insurance claims than people with lower credit scores.

Regardless of what it's called, auto insurance companies are often looking at your credit score (unless you live in a state that prohibits this), and if it drops, you might end up paying more for coverage. On the flip side, if you improve your credit score, you can also improve your auto insurance rate.

Environmental risk factors

Car insurance premiums can go up for a whole slew of reasons you might not have considered, many of which are firmly outside of your control.

Noticed higher speed limits on your local commute? That might be a reason for the increase in your car insurance costs. When states increase their speed limits, it can unfortunately be linked to more accidents on the road. Other risk factors can include increased crime rates, more uninsured motorists in your area, higher rates of theft and vandalism incidents, economic inflation, increased natural disasters and extreme weather, and a greater number of accidents caused by distracted drivers.

Any number of things or a combination of risk factors can lead to insurance companies charging more, especially if these factors lead to more claims for them to pay out.

Increased medical and repair costs

Another unpredictable reason your insurance might go up? When repairs and medical expenses start to cost more. The more insurance companies have to pay to cover property repairs and medical costs, the more they'll charge you for the coverage.

This is why rising costs for the types of expenses your insurance covers can translate to higher car insurance rates.

Age

Age is just another factor out of your control that can influence your car insurance premiums. And if you've gotten older and are now at or over the age of 75, you might see your rates spike.

Senior drivers tend to be costlier to insure, and insurance companies typically charge them higher premiums as a result.

Getting into an accident or getting a ticket

Besides all the unexpected reasons car insurance can go up, there are also the obvious ones — like if you get a speeding ticket, get caught for a traffic violation, or become involved in an accident that's considered your fault.

A DUI is another fast-track way to pay higher auto insurance rates or even lose your insurance coverage altogether, as you'd be considered high-risk from the insurer's standpoint. Moving violations, which are defined as any violation of the law committed by a driver while driving, are another reason you might see an increase in your insurance bill.

The best way to avoid seeing these kinds of increases is by keeping a safe driving record. Another good reason to keep your driving record pristine? Over time, being classified as a safe driver could actually become a factor when your car insurance rate starts to go down.

Tips to bring your premium down

Saving money on car insurance might sound complicated, but it's not. Assuming you have a safe driving record, comparison shopping is a great way to get the best car insurance rates. Start your search online and compare multiple car insurance quotes for the same coverage from different providers. This should give you an idea of what you'll actually need to pay for the coverage you want.

Even if you don't end up switching insurance providers, you can still save money with your current provider by changing your plan a little. This might mean choosing a higher car insurance deductible or even eliminating types of extra coverage you don't need, like comprehensive insurance coverage on an older car. If you're happy with your current provider, give them a call and talk to them about how to save money on car insurance by changing some details in your policy.

Another great way to save a bit on insurance coverage is by bundling different types of insurance coverages with the same provider. If you have other types of insurance, such as renters or homeowners insurance, you can actually save quite a bit of money by buying them all from the same provider.

You might also be able to get discounts for installing certain safety features such as anti-theft devices or taking a defensive driving course to learn techniques to avoid collisions.

Bottom line

It's normal for car insurance to go up, but that doesn't mean you have to pay for it. Depending on why your rates increased, you might have the option to shop around for insurance quotes on a new policy, either from your existing provider or from a new one.

Familiarizing yourself with these common reasons for insurance increases will allow you to make the best decision and save the most money when it comes to the cost of your car insurance.