Opening your insurance renewal notice to find a significantly higher premium is never pleasant. Understanding why rates increase—and what you can do about it—helps you make informed decisions about your coverage.
Reasons Within Your Control
Some rate increases are directly tied to your actions or circumstances:
At-Fault Accidents
Causing an accident is the most common reason for premium increases. Depending on severity, your rates might increase 20-50% or more. This increase typically lasts 3-5 years. Some companies offer accident forgiveness for your first at-fault accident, but not all policies include this benefit.
Traffic Violations
Speeding tickets, running red lights, and other moving violations signal higher risk to insurers. The impact varies by violation type:
- Minor speeding tickets: 15-30% increase
- Reckless driving: 50%+ increase
- DUI/DWI: 50-100%+ increase, sometimes cancellation
Violations typically affect rates for 3-5 years.
Filing Claims
Even claims where you're not at fault can sometimes affect rates, especially multiple claims in a short period. Insurers see frequent claimers as higher risk, regardless of fault.
Adding Drivers
Adding a driver to your policy—especially a teen or someone with a poor driving record—often increases premiums substantially. Teen drivers can double or triple household insurance costs.
New Vehicle
If you've bought a new car, your premium may change based on:
- Vehicle value (more expensive to repair or replace)
- Theft rates for that model
- Safety ratings
- Repair costs and parts availability
Address Change
Moving to an area with higher accident rates, more crime, or more uninsured drivers typically increases rates. Urban areas generally cost more than rural ones.
Credit Score Changes
In most states, insurers use credit-based insurance scores. A drop in your credit score can result in higher premiums, even if your driving record is perfect.
Check Your Record
Request a copy of your driving record from your state DMV and your C.L.U.E. (claims history) report. Errors in these records can cause unjustified rate increases.
Reasons Beyond Your Control
Sometimes premiums increase for reasons that have nothing to do with you personally:
Rate Increases Across the Board
Insurance companies periodically raise rates for all customers in a state or region. This happens due to:
- Increased claims costs in your area
- Rising medical costs
- Higher vehicle repair costs
- More expensive replacement parts
- Increased frequency of natural disasters
Lost Discounts
Your premium might increase if you've lost eligibility for discounts:
- Good student discount expired (turning 25, leaving school)
- Multi-policy discount lost (cancelled renters insurance)
- Loyalty discount changed
- Introductory pricing ended
Age-Related Changes
While rates generally drop as you gain experience, they can increase again for older drivers, typically starting around age 65-70.
Regulatory Changes
Changes in state insurance laws or regulations can affect rates for all policyholders.
What to Do When Your Premium Increases
1. Call and Ask Why
Contact your insurance company and ask for a specific explanation. They should be able to tell you:
- The exact reason(s) for the increase
- How much each factor contributed
- Whether it's specific to you or a general rate change
2. Review Your Policy for Errors
Check your declarations page for mistakes that could be costing you:
- Incorrect vehicle information
- Wrong address
- Drivers who should be removed
- Inaccurate annual mileage
3. Ask About Discounts
You might be eligible for discounts you're not receiving:
- Bundling with other policies
- Defensive driving course completion
- Low mileage discount
- Safety features you haven't reported
- Professional or alumni associations
4. Consider Coverage Adjustments
If cost is a concern, you might reduce coverage on older vehicles:
- Raise deductibles to lower premiums
- Drop collision/comprehensive on low-value vehicles
- Reduce coverage limits (carefully—don't underinsure)
Caution
Don't reduce liability coverage below what you need to protect your assets. Saving a few dollars monthly isn't worth the risk of financial ruin after a serious accident.
5. Shop Around
If your rate has increased significantly, it's time to compare quotes from other insurers:
- Get quotes from at least 3-5 companies
- Compare equivalent coverage levels
- Consider both large national companies and regional insurers
- Work with an independent agent who can compare multiple companies
Different companies weigh risk factors differently. An accident or violation that dramatically increases your rate with one company might have less impact elsewhere.
When Shopping Might Not Help
In some situations, you might not find better rates elsewhere:
- Recent DUI: Most companies will charge high rates or decline coverage entirely
- Multiple at-fault accidents: You're high-risk to all insurers
- General market increases: If all companies raised rates, shopping may not save much
If you can't find standard coverage, you may need to look at high-risk insurers or your state's assigned risk pool. These options are expensive but provide necessary coverage while you rebuild your record.
Long-Term Strategies
Maintain a Clean Record
The most effective way to keep rates low is to avoid accidents and violations. Most rate impacts from incidents fade after 3-5 years.
Monitor Your Credit
Since credit affects insurance rates in most states, maintaining good credit helps keep premiums lower.
Take Defensive Driving Courses
Many insurers offer discounts for completing approved courses. Some states also allow these courses to remove points from your driving record.
Review Annually
Don't just accept renewal notices. Each year:
- Review your coverage needs
- Check for new discounts
- Compare rates with competitors
Understanding Your Options
A premium increase doesn't mean you have to accept the new rate without question. Understand why it happened, explore ways to lower it, and shop around if necessary. Sometimes increases are unavoidable, but often you can find savings through adjustments, discounts, or switching companies.
Remember that the cheapest option isn't always the best. Balance cost with coverage quality and the company's claims service reputation. A slightly higher premium with a reliable insurer beats a low rate from a company that makes claims difficult.