7 Reasons for an Auto Insurance Rate Increase

Insurance is an important part of every budget. Constant guard is required to protect your insurance rate from going up. Creating an awareness of circumstances that affect your insurance rate is the first step in keeping your rates down.

Traffic Violations

Policeman gives driver a traffic ticket.
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Traffic violations are a common reason for auto insurance rates to go up. Some violations are worse than others. Violations are usually classified into two categories—minor violations, which are basically a failure to follow simple driving regulations, and major violations, which are more serious offenses:

Minor Traffic Violations

  • Failure to Yield
  • Following Too Close
  • Improper Backing
  • Improper Passing
  • Traffic Device / Sign
  • Speeding

Major Traffic Violations

  • Attempted Felonies
  • Open Bottle
  • Careless Driving
  • Drag Racing
  • Driving Under Influence
  • Fleeing from Police
  • Vehicular Homicide
  • Passing School Bus
  • Driving Under Suspended License
  • Wrong-Way

If you fight a ticket in court and win, it should not affect your driving record. Attending traffic school can be another option some states offer as a way of avoiding an insurance rate increase due to traffic violations.

Another way to avoid an increase in insurance premium is to purchase minor violation forgiveness. Minor violation forgiveness is a newer bells and whistles type coverage offered by a few different carriers. If you do purchase a product like this, understand all the guidelines, so that you are not blindsided by rate increases. Most forgiveness packages only work for minor violations and will only apply to one violation per driver.

At-Fault Accident

Car accident
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If you caused an auto accident and a claim is filed, your insurance rates will more than likely be increasing. Some insurance companies do offer a buffer that allows for a small payout without an increase, usually under $500. Once again, some companies do offer accident forgiveness, which allows you to have one ​at-fault accident claim per policy without an increase in premium. However, you do pay extra for the coverage without knowing if you will ever be in an at-fault accident. You should check with your insurance agent to see if the coverage is available and how much it will cost.

Comprehensive Claim

Midsection Of Man Signing Car Insurance Claim Form
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Comprehensive claims affecting your insurance rate are still uncommon, but some insurance companies are getting stricter. Rules vary per carrier, so you should ask your insurance agent whether comprehensive claims will make your insurance go up. Most do not charge extra, but some carriers will increase your rate if more than $500 is paid out or if you have multiple comprehensive claims.

Aging

Senior man driving red convertible
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Unfortunately, getting older does not always make your insurance go down. And in many cases, you might see your insurance go up once you are over the age of 70. Insurance companies treat elderly drivers almost the same as ​​teen drivers. Senior discounts usually kick in around 55 years old, but if you are over 70 years old, your rate will probably start to climb.​​

Lapse in Insurance

Businessman commuting on bicycle
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A lapse in car insurance is never good. If you recently lapsed, it is usually possible to reinstate the policy with your current insurance carrier within a week. A fee is usually charged to reinstate, but it is often minor when compared with high-risk insurance rates. Some companies give you a break if your policy has been lapsed for less than a month by not surcharging as high as they would someone without insurance for a longer period of time. Most preferred insurance carriers do not allow any grace period for a lapse in coverage unless you are trying to reinstate your existing policy.

Moving

Car packed and loaded for moving
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It may surprise you that location plays a role in your insurance rate. Moving out of state or even moving a much shorter distance could potentially make your insurance go up. Insurance is often based on claims in your area, so if you live in a major metro area, you may be paying more than if you lived in the suburbs.

Drop in Credit Score

Credit report
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Many insurance companies base your insurance premium on your credit score. There are not many states that prohibit insurance companies from using your credit score. If your credit score plummets, there is a possibility that your insurance premium may go up. Check with your insurance agent to see if your credit score plays a part in your insurance rate.

Insurance rates are volatile. Many things go into calculating premiums, and slight changes can make a big impact. Knowing the factors that can affect your insurance puts you in a better position to prevent increases. Insurance companies can recalculate your rate every renewal, and sometimes a rate increase has nothing to do with your actions. Remember, you are not stuck with one insurance provider—if you see a substantial rate increase without making a single change to your policy or driving history, you can always shop around for cheaper insurance.

Article Sources

  1. Arizona Judicial Branch. "Defensive Driving - Frequently Asked Questions." Accessed July 15, 2020.

  2. Stastny Insurance Agency. "Minor Violation Forgiveness." Accessed July 15, 2020.

  3. Progressive. "Types of Accidents and Claims That Can Increase Your Rate." Accessed July 15, 2020.

  4. Geico. "Learn More About Accident Forgiveness." Accessed July 15, 2020.

  5. Progressive. "Reasons for a Rate Increase." Accessed July 15, 2020.

  6. Direct Auto Insurance. "Save on Car Insurance for Seniors With Direct Auto." Accessed July 15, 2020.

  7. FrontLight Insurance. "How to Deal With an Auto Insurance Coverage Lapse." Accessed July 15, 2020.

  8. Progressive. "What to Do if You Have an Insurance Lapse." Accessed July 15, 2020.