The most common question posed to any commercial insurance broker, is why there is an annual hike in auto insurance rates. Car insurance rates are increasing, or so it may seem in accordance to James Lynch, chief actuary and Senior Vice President of Research and Education at the Insurance Information Institute. According to Mr Lynch, what the automotive world is experiencing is simply a return of pre-pandemic premiums. However, is this the case? Benchmark Brokers is here to explain why exactly are you experiencing an annual hike in premium rates and what factors can you control when it comes to your auto insurance policy.

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Which Auto Insurance Factors are under Your Control?

Low Credit Score

Most insurance companies use a credit-based score to determine customer credit status. Your credit loans on your credit card, your credit history, and your current score have a significant impact on your auto insurance rates. At the time of renewal, your credit score might be the cause of a higher car insurance premium. The solution is simple, pay your credit card bills on time and make sure you have no outstanding payments. A good credit score will help you fix this problem.

Claims History and Driving

Avoiding any kind of accident is the key when it comes to avoiding premium hikes on account of insurance claims. If you’re involved in an accident that is primarily your fault, you might be subjected to higher premium rates at the time of renewal. However, in case you’re involved in several accidents which are not your fault, this will have a considerable amount of impact on your auto insurance premiums as well. The only way to avoid this is to drive safely and avoid constant or timely damage to your vehicle.

Convictions or Surcharges

Traffic violations, such as speeding or driving under the influence can have a significant impact on your auto insurance premium. The insurer might raise your premium rates in case you are responsible 50% for an accident or if you have a history of late payments. These types of increases are referred to as ‘surcharges’, The increase may remain until the time you prove that you’re a good driver. The surcharge time remains dependent on the severity of the accident. A way to avoid this is to become a better driver and improve your driving. Adding accident forgiveness coverage to your auto insurance policy can also help you avoid surcharges.

Other Factors That Influence Your Auto Insurance Premium

Certain factors that might or might not be beyond your control also have an impact on the increase of your auto insurance premiums.
  • Change in Marital Status: According to statistics, single drivers file more claims than drivers who are married. You might experience a surge in your auto insurance premium in case you get divorced or in an unfortunate situation where a spouse dies.
  • Change in Gender Marker: Female drivers have been known to have fewer accidents than their male counterparts. In situations where a person chooses to change their gender marker from female to male, they can experience a rise in their auto insurance premiums.
  • Adding Drivers to Existing Policies: An insurance company might increase insurance premiums in case a spouse or teen is added to the auto insurance policy.
  • Location: Your location might be why you’re experiencing a hike in auto insurance rates. This depends if the claims for vandalism, theft, weather-related damage, collisions, etc increase in your zip code.
  • Your Age: Younger drivers generally pay higher premiums than young adults or middle-aged individuals. Your premiums might also rise when you hit your 60s.
  • Your Car’s Make and Model: If there is an observed spike in the number of claims of your car's make or model, the carrier might increase the premium rates.
  • Lost Discounts: In case you have earned a good driver discount and get into an accident, receive an employer discount and suddenly change jobs, or cancel a policy for which you receive a multi-policy discount, your auto insurance premiums might increase.
  • General Increase: Policy providers might increase the premium rates of all policyholders for multiple reasons. These reasons might be a general surge in insurance claims, the number of cars on the road, or an increase in the number of accidents and fatalities.

How to Lower Your Auto Insurance Rates?

Many factors determine the increase in auto insurance premiums, however, this does not mean that you have no control over them. It's important to re-evaluate your coverage and drop any extra coverage. For instance, if you have paid off your car, you might consider dropping collision or comprehensive coverage.

Certain auto insurance companies consider offering a discount on vehicles that are equipped with added features like an anti-theft system, airbags, etc. Also buying multiple insurances from the same company can waive off premiums. When buying any form of insurance you should negotiate terms with your commercial insurance broker to figure out what kind of discounts you are liable to receive.

Raising your deductible is a good way to enjoy reduced rates, although you might have to pay a little bit more out of your pocket.

Here are a couple of helpful tips to keep your auto insurance premiums under check.
  • Reduce your annual mileage to lower your premium rates
  • If you’re driving a car that is costlier to insure, consider trading it in for a more economical option.

Conclusion

When it comes to auto insurance it is always good to compare premiums. This is where we come in. Being seasoned commercial insurance brokers from Houston, we offer our clients the option to go through multiple options before picking the best fit for them. Visit our website today and find out everything you need to know about your auto insurance policy. Buying insurance has never been easier. Get the best policies at the fairest premiums today only at www.benchmarkbrokers.com.