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Common Reasons Why Auto Insurance Premiums Increase

auto insurance rate increase

Common Reasons Why Auto Insurance Premiums Increase

Every driver should expect an increase in the auto insurance rate at some point due to multiple factors. The more you drive and your driving style are key indicators of how soon your auto insurance premiums rise. But you do have choices that can keep your insurance costs under control. Here’s a deeper look at how insurance rates fluctuate over time.

Where You Live and How You Drive

A major reason why auto insurance rates increase has directly to do with your zip code. If you move to a location with a higher crime rate or accident rate, you’ll be paying higher auto insurance premiums. If you’re moving to a new location, make sure to ask your insurance agent how it will affect your rate.

Your premium may also rise based on your driving behavior. Long commutes to work across town can boost your rate and add more mileage to overall driving. The more time you spend on the road, the more you are at risk of being involved in an accident.

Your driving record will also impact your insurance costs, as insurers offer lower rates to drivers with minimal accidents or violations. A series of speeding tickets can drive up your premium. If you’re involved in causing multiple accidents, insurance agencies view you as a high-risk or even dangerous driver and will boost your premium accordingly.

Number of Claims

Another reason for an auto insurance rate increase is when insurance companies, in general, are strained by increasing claims. If the industry is flooded with claims, it has to make adjustments for its own financial condition. Studies before the pandemic indicated a growing number of drivers filing property damage and collision claims.

Even during the pandemic with fewer people on the road, there’s still a chance for accident claims to rise if motorists increase speed and distance. Many people have been able to cut accident risks by taking public transportation, but during the pandemic, fewer consumers will choose this option for social distancing purposes. But individuals who cut back on driving in favor of walking or bicycling can lower their rates.

Targets for Thieves and Vandals

Certain vehicles, especially sports cars, attract criminals who steal parts or entire vehicles. Drivers of flashy cars may see auto insurance premiums rise after purchasing a new vehicle that’s popular with thieves or vandals. Be aware that certain models, such as the Cadillac Escalade, are targets of thieves. The least stolen vehicle is the Toyota Prius.

Any type of rare vehicle can potentially equate with higher insurance rates because of the scarcity of shops equipped with the proper tools. So if you think about buying a classic car or a custom model to show off to the neighborhood, remember it could mean paying more in insurance.

Higher Medical and Repair Costs

Various economic activity can push insurance rates higher, such as the rising costs of healthcare. The higher the costs of medicine and surgery, the more an insurance company has to pay out for bodily injury claims.

The same is true with auto repair shops investing more in innovative technology for diagnostics. Insurance rates will further be affected as new cars become increasingly more electronic. This advancement forces auto shops to invest in new technology to stay competitive. Naturally, the costs are passed down to insurance companies.

Plenty of reasons exist why auto insurance rate increase over time. You can keep your insurance costs low by practicing safe driving and using your vehicle more sparingly. Contact the experts at Remland Insurance in Orange, California, to get more information on the best auto insurance premiums.


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