Auto insurance rate increases may seem to come out of the blue. What happened? Was it something you did? Sometimes it has nothing to do with you. Your state may have passed legislation requiring insurers to adjust their rates. Or your insurance company may be tweaking its risk-to-reward ratio. It invests the money you and others pay in premiums so it can earn money to pay insurers' claims. If it's not earning enough in a shaky economy, it may raise its rates to compensate. More often than not, however, something has changed on your end.
You made a claim
The whole idea behind carrying insurance is that the company will pay for it if something goes wrong. But the unfortunate reality is that your rate may go up if you have to make a claim. The mishap indicates to your insurer that you may be a higher risk than originally thought. This is most often the case if you were involved in an accident that's determined to have been your fault.
You have a moving violation
It's all about risk for your insurer — the likelihood that you'll make a claim is calculated into its risk-to-reward ratio. That's why drivers with spotless records tend to pay less in premiums. If you've recently been cited for a moving violation your rate is likely to increase as soon as your insurer learns about it. Insurance companies typically check the insured's driving records whenever renewing their policies. The more serious a violation the higher your rate will increase. Some insurers may be forgiving of just one speeding ticket, but two will almost certainly affect your premium, and an alcohol-related violation could have a significant effect.
A discount has expired
Look at your policy and review the terms of any discounts you were receiving. Some discounts expire after a certain period of time. Find out if there are any others you may qualify for to bring your premium back down. Does your teen driver regularly make the honor roll? Ask about a good student discount. Or maybe you're eligible for a discount because you've never made a claim.
There have been changes in your life
Simple changes that may seem totally unrelated to your car insurance policy can affect your rate. Maybe you lost your job - or missed a credit card payment or two - and now your auto insurer wants more money from you, also. It could be that your credit score dropped. Companies use your credit history to arrive at an insurance score that's supposed to be indicative of how likely you are to make a claim. This is illegal in a few states, but you may not live in one of them.
Other seemingly innocent changes can affect your rate as well. Maybe you moved. If your new zip code is associated with a higher theft or accident rate your premium will probably go up a bit. Rates are higher if you live in a city rather than the country or a distant suburb. And, of course, adding a driver or buying a new vehicle will immediately affect what you're paying for coverage.