3 Reasons Why Your Car Insurance Rate is Going Up
Photo by Denys Nevozhai on Unsplash
The time to pay your bills has come around and you notice something that is a bit unsettling. Your auto insurance premium has gone up, again! Even when you didn’t make any claims or changes to your record, this is still the case. As you keep asking yourself why, frustration begins to fester and you look for someone to blame—it has to be the insurance company, right? They are charging you more and more just to make more money. Well, what if we told you that wasn’t the reason? What if we told you that your premium is actually increasing because of several different trends in society, requiring insurance companies to adjust their prices?
Here are three major reasons why insurance companies have needed to raise their rates:
1. Driving has become more affordable.
2. There are more cars on the road.
3. Technology has advanced.
The truth is that insurance companies have little control over their rates. The cost of your car insurance is highly dependent on larger societal factors, such as the state of the economy, trends in the auto industry, and newer technology. Increased premiums might not sound like a good thing, but we can assure you that these higher prices will protect you in the long run, as they allow insurance companies to have sufficient funds to cover you in the event of an accident.
Although you can’t control how frequently or safely others drive, here are a few things you can do to prevent your auto insurance costs from being higher than necessary:
Shop around. Get quotes from multiple insurance companies to find the best value. You can do the research yourself or go to an independent agent to help generate quotes and compare policies with you. Either way, it’s free!
Ask about discounts. You could be eligible for discounts for things you might already be doing, such as earning good grades, having a low mileage, equipping certain safety features, or taking a defensive driving course.
Choose a higher deductible. When you increase your deductible, your premium will be substantially lower and so will your overall insurance expenses, provided that you don’t get into any accidents. Just make sure you’ll be able to pay the deductible in the event of an accident.
Reduce coverage on older vehicles. If your older car isn't worth much, it might not be worth buying a lot of coverage for it. A common rule is if your annual premium exceeds 10% of your car’s value, consider dropping unnecessary coverage, such as collision and comprehensive.
Avoid using your phone while driving. Multitasking is harder than you think. Remember that you’re sharing the road and getting distracted puts others in danger as well.
Sources 1. U.S. Energy Information Administration https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epmr_pte_nus_dpg&f=a 2. Money magazine http://time.com/money/3659821/cheap-gas-prices-increase-accidents-deaths/ 3. Bureau of Labor Statistics https://data.bls.gov/timeseries/LNS14000000 4. Wall Street Journal https://www.wsj.com/articles/auto-industry-poised-to-set-annual-sales-record-1483541246 5. Federal Highway Administration https://www.fhwa.dot.gov/pressroom/fhwa1704.cfm 6. Federal Highway Administration https://www.fhwa.dot.gov/policyinformation/travel_monitoring/tvt.cfm 7. Centers for Disease Control and Prevention https://www.cdc.gov/motorvehiclesafety/distracted_driving/index.html 8. AT&T https://www.att.com/Common/about_us/pdf/twd_commutor_survey.pdf
