Top 4 Factors That Raise Car Insurance

Every year you get notice of your new premiums for car insurance. You see that they have increased from last time. Unless you recently purchased a new vehicle, you may be shocked to see the cost. Here is a list of factors that can raise car insurance and what you can do about it.

Lapse in coverage

If you lost insurance coverage for any reason for more than 30 days, you will likely end up paying more in your next policy. A lapse in coverage requires a new policy to be written with the same steps taken by the provider. Because you had a lapse in coverage, even if it was for a short time, you’ll be given a higher rate.

How to Avoid: Make a reminder to pay your insurance when it comes due or set up for autopay. If you don’t have a vehicle, find out if you can get special coverage as a driver, which is often at a cheaper rate until you buy another vehicle.

Tickets and accidents

Another big factor in your car insurance rates is whether you’ve had a ticket or filed a claim for an accident. Tickets show that you are a higher risk for an accident, which will cause your premiums to increase. If you’ve been in an accident recently and the insurance company had to pay out, you are now considered a higher risk driver. This means trouble for any future claims you might have to file.

How to Avoid: If you’ve gotten a ticket or been involved in an accident, you can’t do much to get those removed until they fall off your record on their own. However, you can often lessen the impact if you take a safe driving course. Many insurance providers will reduce your premiums with successful completion.

Change in credit rating

When a new policy is written, you can expect a credit check. This will even happen when you’ve let your policy lapse. Some have a credit check done at each renewal as well. If your credit rating went down, your premiums will likely go up. Some studies show that drivers with lower credit scores are at a higher risk for accidents, which is the reason for the increase in premiums.

How to Avoid: While you may not be able to avoid the raise in premiums if your credit score took a dip, you can work to restore it before the next renewal. Pay bills on time and strive to reduce debt. This can help raise your score by quite a few points and impact your next policy premiums.

Change in life

Major life changes can also raise car insurance rates. If you move to an area of higher crime or more accidents, you could end up paying more. Adding another person, especially a teen driver, will definitely have an impact too. Even a change in jobs or school could raise your premiums if you lose out on discounts.

How to Avoid: While you may not be able to avoid these life changes, you should be aware of their impact on your premium to prepare your budget. You can also shop around for car insurance to find one that is cheaper.

Insurance premiums can change with every renewal. Be aware of what affects your policy rates and what steps you can take to get the best value.