4 Things That Can Raise Your Car Insurance Rates
Don't be caught off guard by higher costs!
- Auto insurance providers set premium prices based on risk.
- Certain actions that policyholders take, such as getting traffic tickets or purchasing expensive vehicles, could make them riskier to insure.
- Higher risk can lead to higher insurance premium costs.
Drivers who have car insurance coverage they are happy with may be surprised to find that their rates aren't necessarily locked in for life. In fact, there are many things motorists could end up doing that send their premiums skyrocketing.
Policyholders who want to make sure their insurance coverage doesn't become a lot more expensive should be aware that doing one of these four things could result in an increase in rates.
1. Getting a traffic ticket
Car insurance companies assess how much premiums should cost based on how risky they believe a driver is. If an insurer believes a motorist is more likely to get into a crash, premiums will be higher.
If a driver receives a traffic ticket for a moving violation such as speeding or running a red light, this shows the insurance company that the motorist has a propensity to engage in high-risk behaviors behind the wheel.
Whatever violation the driver committed that led to the ticket could likely also increase the risk of a collision. Insurers will take that into account and raise the costs of coverage going forward.
2. Causing a traffic accident
If a driver is at fault for a traffic collision, this is also a major red flag to insurers. Not only will the company have to pay out for the accident that happened, but it will also have reason to suspect the motorist who caused the crash doesn't drive safely and is at a higher risk of causing another collision in the future.
Unfortunately, the worse the accident and the more damage it does, the higher auto insurance premiums are likely to be in the future. Some insurers also offer safe driving discounts that could be affected by causing a traffic accident, which can send premiums skyrocketing even further.
In some cases, it's possible insurers will offer accident forgiveness, so they may not raise premiums after certain collisions. However, drivers are usually limited to having one accident forgiven. And changing to a different insurer could be more expensive after a collision, even with accident forgiveness in place under existing coverage, so drivers could end up stuck with their current carrier.
3. Moving to a more dangerous neighborhood
Moving to an area where more accidents occur can result in a higher risk of a collision and thus raise auto insurance premiums. Plus, insurers don't just cover collisions. If drivers purchase comprehensive coverage, the insurance company will also pay out if a vehicle is stolen or damaged by vandals. As a result, a move to a more dangerous neighborhood where other problems could occur will also result in an increase in insurance premiums.
4. Buying a more expensive car
More expensive cars can cost more to repair or to replace in the event of a collision. There may also be an increased risk the vehicle will be stolen. And, of course, if a costlier car is taken, then the insurer would need to pay out more to the policyholder since the vehicle has a higher market value.
For this reason, if a driver purchases a car that costs more than the one he or she had before, this is also likely to lead to an increase in insurance premiums.
Motorists should aim to avoid accidents and tickets and should be aware of how a move or a new vehicle purchase could affect their premiums so they can anticipate the impact on their budget.
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