Why Did My Auto Insurance Go Up for No Reason?
An auto insurance policy can go up for no reason based on the level of risk. This means that an increased number of car accidents in your ZIP code can cause your car insurance to go up for no reason. The auto insurance rate can also increase for no reason due to inflation, which affects medical and business operation costs. If your auto insurance went up for no reason, start comparing auto insurance quotes below to find more affordable coverage in your area.
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UPDATED: Mar 11, 2022
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You haven’t been in an accident. You didn’t get a speeding ticket. You haven’t made any type of insurance claim. So, why did my insurance go up?
The car insurance premium can fluctuate wildly based on several different factors. Getting married can affect your car insurance premium, for example. Even moving down the street can change your auto insurance premium.
Today, we’re explaining some of the most common reasons your car insurance policy increased – even if you didn’t make a claim or get into an accident.
How Insurance Premiums Work
The insurance industry is all about risk. You’re paying your car insurance company to take on risk. If you get into an accident or if a tree falls on your vehicle, then your car insurance company has to cover these costs.
Your auto insurance company is a for-profit business. To ensure they make a profit, the insurance company uses hundreds of factors and mathematical equations to calculate risk.
Based on these risk factors, the auto insurance company will charge you a certain amount for premiums. If you are a higher risk driver who is more likely to make a claim, then you will pay higher premiums. If you are a lower risk driver with a long history of safe driving, then you will pay lower premiums.
With that in mind, your insurance company will change your car insurance rate whenever your risk changes or when their cost of doing business rises.
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13 Reasons your Car Insurance Increased Without a Claim, Accident, or Ticket
So you didn’t file a claim, get into an accident, or receive a ticket – but your car insurance still went up ‘for no reason’. Why did your car insurance premiums increase? Let’s take a closer look.
Moving Addresses: Your ZIP code plays a huge role in car insurance premiums. Some ZIP codes have higher accident rates or vehicle theft rates, for example. A ZIP code in the suburbs may have a significantly lower risk than a ZIP code in a rough part of downtown. A rural ZIP code has lower accident rates than a city ZIP code filled with freeways and traffic.
Rising Accident Rates in your Region: If there was a higher-than-usual number of accidents in your region or state last year, then your car insurance company may raise premiums to compensate. So, check the list of car accidents by state.
Rising Labor or Equipment Costs for Car Repairs: Car insurance companies need to pay to repair or replace a vehicle after an accident. The price of labor or equipment might have increased, for example, or the cost of buying a new car might have increased.
Rising Rates of Distracted Drivers, Collisions, and Other Incidents: In most states, the number of distracted drivers on the road has increased in recent years. As the number of distracted drivers increases, it can significantly increase the risk of car insurance companies.
Rising Rates of Uninsured Drivers: In some states, nearly 1 in 5 drivers are uninsured. Nationwide, approximately 1 in 7 drivers are uninsured. Uninsured drivers create substantial risk for car insurance companies. Even if the uninsured driver is at-fault for the accident, the insurance company of the not-at-fault driver may need to pay the bill.
Higher Speed Limits: Drivers in Germany like to brag that they have the highest speed limits and lowest accident rates in the world. In the United States, however, higher speed limits are almost always linked to higher rates of traffic fatalities. If your state recently raised its speed limits, then insurance companies may have raised prices to cover this higher risk.
Extreme Weather: Wildfires, floods, hurricanes, and blizzards are increasing in likelihood and intensity every year. In some regions, “once in a century floods” are occurring every five or ten years. Insurance companies are struggling to keep up, so they raise rates.
Rising Rates of Insurance Fraud: Insurance fraud costs insurance companies billions of dollars per year. If insurance fraud rates have increased in your region, then insurance companies will raise premiums to compensate.
Rising Medical Costs: America has the costliest medical care in the world, and rates continue to increase every year. Car insurance companies are forced to pay expensive medical bills after an accident. As medical costs continue to rise, insurance companies need to raise premiums to compensate. Healthcare costs aren’t expected to drop anytime soon in the United States: according to the Centers for Medicare and Medicaid Services, national health spending is expected to rise 5.5% every year until 2026, ultimately reaching a total of $5.7 trillion.
Natural Disasters: A natural disaster can wreak havoc on an insurance company – especially if most of the insurance company’s customers are concentrated in one disaster-struck region. If a hurricane, tornado, flood, wildfire, or another natural disaster recently struck your region, then insurance companies might raise premiums to compensate. A natural disaster can deplete an insurer’s reserve fund, and multiple natural disasters in quick succession can push an insurer or insurance provider to bankruptcy.
You Got Older: Generally, auto coverage premiums drop with age and experience. Once you reach a certain age, however, premiums will start to slowly increase. Most insurance companies start raising premiums in your 70s and 80s, for example, because statistics show older drivers in this age range are more likely to make a claim.
Higher Cost of Doing Business: Insurance companies will raise premiums if the cost of doing business increased. Maybe the insurance company has higher overhead expenses. Maybe your state introduced new regulations or requirements for insurance companies. All of these can increase costs for your insurance company, and these costs are inevitably passed down to drivers in the form of higher insurance premiums.
Compare Car Insurance Rates Regularly to Avoid Higher Premiums
Sometimes, your car insurance company is simply raising rates because they can. They know you’re a loyal customer who has stuck with the same insurance company for twenty years. They assume you’re not going to switch anytime soon.
Compare insurance prices in your region today using an online car insurance comparison form.
You may be surprised by how much cheaper a competing car insurance company is – especially if you haven’t compared car insurance in a few years.
Ultimately, an insurance company raises rates for two reasons:
- Because the driver is riskier to insure
- Because the insurer’s costs have increased
Even if you didn’t make a claim or cause an accident, your insurance premiums can fluctuate from year to year.