Why do insurance companies raise their rates?

Accidents are on the rise, leading to more complaints. The number of car accidents has increased, leading to more insurance claims. This higher volume of claims, along with higher vehicle repair and replacement costs, is ultimately what drives up insurance rates across the industry. Auto insurers price their policies based on several factors.

Sometimes these cost factors increase and sometimes decrease. In most states, costs are currently rising. Your actions, as a policyholder, can also affect what you pay. For example, if you add another car or a teen driver to your policy, your costs will increase.

Alternatively, your costs will decrease if you remove a car or driver from your policy. The auto insurance premium is the annual cost of your car insurance coverage divided by the number of payments you make each year. A poor credit history can have a significant impact on your insurance score because research shows that people with lower insurance scores are more likely to file a claim. Car accidents and traffic violations are common explanations for the increase in the insurance rate, but there are other reasons why car insurance premiums rise, such as a change of address, a new vehicle and claims in your zip code.

We contacted a data collection organization, the Insurance Information Institute (Triple-I), for their opinion on the increase in the costs of auto insurance. In addition, your insurance rates may increase even if the accident was not your fault, depending on the policies of your state and your insurance provider. But keep in mind that insurance premiums are not raised on a whim and that the reason for a rate increase is almost always related to insurance risk.

Janelle Knobler
Janelle Knobler

Wannabe zombie buff. Professional social media ninja. Unapologetic zombie evangelist. Evil tv buff. General web geek.

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