If you are anything like the average person, you probably budget, and you have a general idea of what you will spend on your expenses from month to month. For this reason, when you notice an increase in your auto insurance costs, you probably have some questions, especially if you have not been involved in an accident. While each person's situation is different, there are some common scenarios that can cause an increase in auto insurance costs.
1. Credit Rating Change
Although you may not remember, when you first signed up for coverage with your insurance provider, they performed a pull on your credit. Based on your credit score and your payment history, the rate you were charged for your premium was at least, in part, based on this information. At the time of your renewal, if your credit rating has changed drastically when the insurance company performs another pull of your credit, this change in your rating could be reflected in your new premium costs.
2. Risk Assessment Adjustment
Where you insure your vehicle can drastically affect the amount of money you pay for your auto insurance. For this reason, if you live in an area with an increased risk for dangerous storms or frequent incidents of vehicle theft, the rate you pay for insurance will be reflected by these risks. Every so often, insurance companies perform risk assessments, generally based on coverage zip codes. If the risk assessment of your zip code increases before your policy renewal, you could pay more.
3. Non-Auto Claims
When most people think about factors that can increase their auto insurance costs, filing a claim for an accident is one of the first things that comes to mind. However, it is important to understand that non-auto accident claims can have the same effect. Since many insurance companies subscribe to a centralized claims database, insurance companies generally can review your claims history. Consequently, if a person has an extensive claims history, their rate might increase.
4. Change in Coverage
A change in your insurance coverage can also be the cause of increased insurance costs. This problem is especially common for people who have bundled insurance policies. Consider a driver who had their homeowner's insurance and auto insurance bundled with the same insurance company, for instance. If the person decided to move their homeowner's insurance to another provider, they would likely lose the multi-policy discount on their auto insurance plan, which could cause the rate to increase.
If you have concerns about your auto insurance plan or rates, do not hesitate to ask questions of a local insurance company.