Why Did My Auto Insurance Rates Change?

At the beginning of every policy period, you are given a notice of the total amount of your premium cost for the next term. If you are the type of person who has your bills memorized and you see an increase in your premium cost, your curiosity (and perhaps temper) may begin to rise as you wonder why your premium has not only changed, but become more expensive. There are a few legitimate reasons why auto insurance companies increase their customer’s rates, and maybe one of the reasons below pertains to why your rates went up.

You Were in An Accident

Of course your rates went up if you were in an accident! Any time you file a claim with your auto insurance company, your rates are going to increase. Auto insurance premiums are based on a number of factors, one of which is the number of times a driver or policyholder has filed claims over the past few years. The more claims that are made, the more money the insurer is paying to fix the policyholder’s accidents, especially if it was a major accident and the costs were close to or at your purchased limit. If the insurer knows they’ll be paying more to insure you, they will charge you higher rates to try to balance their spending.
The one exception to this increase is if your auto insurer offers an accident forgiveness plan. This plan usually includes rules like no accidents or other traffic incidents for 3 to 5 years as a prerequisite. Then if the driver happens to be in an accident, there will not be an increase in rates for that one accident. The time period to qualify for the accident forgiveness plan could then start over, if the insurer offers it more than once to drivers.