Every car owner and driver has at some point in their life opened up their car insurance bill expecting one price and received a shock when it’s higher than expected. There is enough stress and frustration in life without having to worry about whether or not the cost of car insurance will rise without notification.
Luckily, there are a few reasons for why car insurance companies raise rates. Knowing some of these reasons can help you prepare for those unexpected rises in insurance rates. Here’s a look at the three most common reasons car insurance companies raise your rates.
Recent Accidents
Car insurance is supposed to cover you in case of an accident. However, once you get into an accident your rates will go up because you are considered an “at risk” driver. Depending upon the type of car insurance company you use, just one accident can raise your rates. Some companies offer an accident forgiveness program where some accidents are forgiven and rates do not increase but some companies do not.
If you got into a recent car accident you can expect your rates to jump anywhere from a couple of dollars to hundreds of dollars.
Speeding Tickets
Many car insurance companies consider speeding and reckless driving a recipe for disaster. To convince drivers to not drive recklessly or speed, car insurance companies will often raise the cost of car insurance on people who are habitual speeders or reckless drivers. This is because the insurance company believes these types of drivers are at a higher risk for accidents and should pay higher rates to be insured.
Other Drivers on the Insurance Policy or in the Same Household
Sharing an insurance policy might help you save money in the long run but it can also cost you money if the other people on the policy are caught speeding, driving recklessly, or in an accident. Insurance companies judge everyone on a policy the same, so if one person does something wrong, everyone on the policy faces the consequences and that usually means higher rates.
Some car insurance companies will even raise rates if someone who lives in the same household as you is caught speeding or in an accident. Even though they aren’t on the same policy, they are in the same house and can use the car. Therefore they are considered a risk, and the car insurance policy holder will have to pay for that risk.
It can be tough to figure out what the cost of car insurance is going to be. However, by assessing your risk factor and determining if the car insurance companies view you as an at risk driver or not, you can figure out if your insurance rates will be higher or lower than they were previously.