Today, many Americans are noticing an increase in their auto insurance premium and that’s been a trend for the past few years.
Even drivers who did not file any claim are coping with more expensive policy renewals. But, why do auto insurance premiums increase? How do auto insurance companies calculate their premiums?
It all depends on your driving profile and other external factors that could affect your driving.
Those external factors could be credit scores, traffic violations, occupations, and even driving trends or statistics. For example, more Americans are getting involved in crashes owing to distracted driving.
Yet, reaching an optimal level of accuracy could be challenging since many auto insurance companies calculate their rates differently.
For that reason, here you’ll learn why auto insurance premiums increase.
Average miles are increasing
According to the AAA Foundation for Traffic Safety, Americans are hitting the road more than previous years.
Key reasons include lower gasoline prices, better economy, and more fuel-efficient vehicles on the road.
When it comes to auto insurance, driving more miles increases the chances of getting involved in a car accident.
The number of auto insurance claims continues to increase
The Insurance Information Institute found that drivers are filing more claims compared to other years. The claim frequency is going up and that situation forces insurers to jack up rates.
This means that auto insurers are paying more for property damage liability, collision, and bodily injury claims.
Click here to learn how to file an auto insurance claim.
Medical bills are skyrocketing
Health insurance rates and medical costs are skyrocketing and crushing not only patients but also auto insurance companies.
When a driver gets injured during a car accident, his/her auto insurance company covers the medical costs, which keeps getting more expensive.
New vehicles are more expensive to repair
As cars keep getting more sophisticated, with modern features and equipment, auto insurance companies are starting to get hit by the extra expenses that are adhered to car repairs.
Getting the right experts and the appropriate diagnostic equipment could be costly, and that additional cost is passed on to auto insurers.
That’s why it is always advisable to consider the type of vehicle you are driving when shopping for auto insurance.
Bad driving records
Generally, drivers with bad driving records accumulate a series of car accidents and traffic infractions.
There’s no secret that drivers with bad driving records are commonly subjected to higher auto insurance premiums.
Of course, traffic violations and car accidents are great indicators of high-risk drivers, but not every infraction rises your auto insurance premium.
Changes in your lifestyle
Just so you know, your zip code has an impact on your auto insurance costs. But you may be wondering how auto insurance companies calculate rates based on location.
Auto insurance companies look at your area’s claims history to determine your premium.
At the same time, your premium could also increase if you purchase more coverage add-ons or reduce your deductible.
It’s time to save more money
Are you paying a lot on auto insurance? Click here to help you get the auto insurance policy that best suits your budget and needs.