When Does Car Insurance Raise Your Rates? Key Factors That Lead to Higher Premiums
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Just because you have great auto insurance rates now doesn't mean you always will. Insurance premiums can change over time based on factors such as accidents, traffic violations, or claims. When that happens, it can be frustrating and an unwelcome burden on your budget.
The best defense against rising insurance rates is knowledge. So when does insurance raise your rates? Find out which circumstances can lead to higher premiums and what can you do about it.
Factors Influencing Insurance Rate Increases
When you first got car insurance, a clean driving record and good credit score may have helped you lock in low premiums. However, that can change over time because of several factors.
At-Fault vs. No-Fault Accidents
In the U.S., there are 38 at-fault states and 12 no-fault states. The primary difference between these two car insurance systems is who pays for what after an accident. In at-fault states, the driver who causes an accident pays for both the other driver's injuries and property damage. In no-fault states, each insured drivers pay for their own injuries, while the at-fault party pays for all property damage.
In either instance, the driver who is at fault will see increases in their insurance premiums. In some states, however, insurance companies may determine that both drivers were partially at fault and increase the insurance rates for both drivers.
Severity of the Claim
Does insurance go up after a claim? Not always, but it certainly can, even if you're not at fault for an accident. Moreover, larger claims cost insurance companies more money, leading companies to raise your insurance premiums more than after less expensive claims.
Even if you're not at fault, a costly claim may make an insurance company deem you a higher risk to insure and raise your premiums. A less extensive claims history helps keep rates lower.
Driver's History and Behavior
People with a clean driving record almost always get better premiums. (Teen and elderly drivers may be exceptions.) Points on your driving record from accidents or traffic violations, such as speeding tickets or moving violations, will lead to premium increases.
Insurer Policies and Practices
Sometimes you may see a car insurance rate increase for no apparent reason. This is because insurance companies periodically review policies and adjust rates based on broader market trends or internal policy changes. Typically these aren't major increases, but you should know that your insurance policies may simply become more expensive over time due to inflation, materials costs, and other factors outside your control.
Accident Forgiveness and Duration of Rate Influence
Many insurance companies offer accident forgiveness, which can protect your insurance rate from rising after an accident.
Accident Forgiveness Programs
Each insurance company has different accident forgiveness protections, but generally these programs prevent a driver's insurance rate from increasing after their first at-fault accident. Of course, you'll have to pay extra to add this coverage, but it can be very helpful to avoid skyrocketing rates after an accident.
How Long Accidents Stay on Your Record
The length of time that accidents stay on your record depends on who was at fault, the state, and the insurance provider. Generally speaking, accidents stay on your insurance record for three to five years.
Impact of Multiple Accidents
Even accident forgiveness programs can't secure your rates if you have multiple accidents, especially at-fault accidents. High-risk drivers have higher premiums, and if you have multiple accidents within a year or two, you can expect rate increases.
Strategies To Mitigate Rate Increases
The answer to when does insurance raise your rates can be murky. Usually it's when you harm your own driving record, but sometimes it's due to no fault of your own. Either way, it's good to know how to mitigate rate increases.
Reviewing and Adjusting Coverage
Insurance companies periodically review their policies, so you should, too. Whether you move, change cars, or go a year or two with a clean driving record, you should check in from time to time to make sure your coverage still works for your budget and situation.
Shopping for New Insurance Quotes
There's no rule that you have to keep the same insurance policy forever. While switching policies frequently can lead to rate increases, finding a lower rate from another provider may offset that impact.
Exploring Discounts and Bundles
Many insurance companies offer discounts for safe driving or taking defensive driving courses. In addition, you may be able to save by bundling your auto and homeowners insurance policies. Talk to your insurance agent to see what discounts or bundles you may be eligible for.
FAQ
Will My Rates Go Up After a Minor Accident?
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Can I Avoid Rate Increases?
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What Happens If I Don't File a Claim?
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Manage Your Insurance Rates and Understand Your Options
Avoiding car insurance rate increases is within your control. Maintaining a clean driving record is one useful step, but it's not your only option. To find better deals if you experience a rate hike, use EverQuote's comparison tools to get custom quotes based on your driver profile and other factors.