My Premium Is Increasing Again? Understand Rising Auto Insurance Rates

One cause of rising rates is the expanding economy. More drivers on the road — commuting to work or heading off on vacation — means more accidents are likely to occur. Additionally, health care costs are only increasing with time, which means higher claims for insurance companies.

Between 2005 and 2013, insurance companies faced a 32% increase in the average cost per bodily injury. Another cause of rising claims is the fact that cars are now costlier to repair. Replacing a bumper alone can cost an insurance company almost $1,000. If there is damage to a car’s frame, that cost could rise to $10,000. Technology is also adding to the number of distracted driving incidents.

More drivers driving with more distractions in more expensive cars mean higher claims for insurance companies. Higher claims for insurance companies mean higher premiums for drivers.

Vehicle owners: Lower your insurance premiums

Vehicle owners don’t have to blindly accept increasing premiums as a fact of life. There are steps drivers can take to help keep premiums from increasing unnecessarily.

• Review before you renew. Before agreeing to renew an existing policy, check it closely for any issues or errors. Ask your insurance agent if he or she has applied all possible deductions.
• Ask why. If your rate has increased, simply asking why this has occurred can help illuminate the problem. It’s possible your credit report has errors that triggered the rate increase.
• Bundle up. Bundling your car insurance and homeowner’s or renter’s policy under one insurer may help reduce your overall rate. Restaurant owners can bundle their auto, home, and franchise insurance for additional savings.
• Change your payment option. Most insurance companies allow monthly payments or bi-annual payment plans that offer discounts for amounts paid in full. Changing your payment plan can be as easy as setting up autopay.
• Shop around. It is likely that if rates have increased with your current insurer, they have also increased with other companies as rate increases tend to be industry shifts. That being said, it never hurts to check. Before renewing, shop around with other insurance providers to see if you can find a better rate.
• Adjust your premium and deductibles. If, after all of the above, your rate is still too high, you may want to consider adjusting your premium and deductibles. This is a risky move, however, and you should proceed with caution. Any time you reduce your coverage to save on your premium, you put yourself at risk of having to pay more out of pocket in the event of an accident.

Dangers of reducing coverage to lower insurance rates

As you consider ways to lower your premium, keep in mind the importance of adequate coverage. Auto insurance is there to protect not just you, your vehicle, and your passengers but also all the other vehicles, drivers, and passengers on the road around you. You may be driving safely, but that doesn’t mean the person in the car behind you is doing the same.

Reducing your coverage means reducing your protection. Remember that health care and repair costs are only increasing with time. It is up to you to pay for any costs your insurance policy doesn’t cover.