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April 28, 2017

Why do my Car Insurance Rates Increase?

No one likes paying more than what is expected, which is why we may question why our car insurance rates keep increasing for "no reason". There are several factors that are put together into a scoring algorithm to determine your insurance premium rates. Understandably, this increase can be very frustrating, so let's shine some light on the multiple reasons as to why your insurance premium may have suddenly risen.

Claims Increase

When a sudden catastrophe much like a fatal hailstorm strikes, I bet you're glad that you got insurance to keep you protected, but you may not be the only one thinking this. You and hundreds of others that were affected by this calamity may have this same idea. The insurance companies will cover the repairs but this increase in claims is costing them thousands of dollars to help fix medical, property or collision damages. This leads them to raise their premium rates during the next renewal cycle.

Zip Code Area

Certain geographic areas will be marked as high risk due to heavy traffic, road conditions, weather, crime and other factors. Chances are, if you live in a congested part of town or in an area known for having natural disasters such as earthquakes or flooding, your insurance rates may be higher than usual because of the amount of accidents reported in that area. Higher risk means higher rates.

Driving Records & Driving Habits

Maintaining a spotless driving record is essential, especially when it comes to renewing your insurance policy. Traffic violation tickets and/or at-fault accidents may raise your insurance premium at the time of renewal or when you are shopping for insurance because that spotless record has now been altered. You've lost your safe driver record but hopefully can redeem it after being accident free for a few years – typically 3 to 5 years.

Credit (Insurance Scores)

Anyone can say they're a good driver, but actions speak much louder than words. Many insurance companies use insurance scores to determine your insurance rates. Credit scores are a subset of your insurance scores and helps determine the likelihood of an insurance claim in the future. This is one of the reasons for rate fluctuations.

Additional Drivers

Typically, if you add an experienced driver with a clean record to your insurance policy, it shouldn't affect an increase in your premium. However, if the driver you are adding has recent accidents or traffic violations on record, they may be seen as a high risk driver and could increase the rate. Adding teens and young drivers, typically under age 25, would account for higher rates than other groups because they are considered inexperienced in comparison to mature drivers by most insurance companies.

Group Classifications

As mentioned before, it's all put into an algorithm to determine what type of a driver you are. It all sums up to what classification you fall under - gender, age group, occupation, type of vehicle you drive, etc. They audit several factors to see which group has filed the most claims and from there, a possible increase in the rate may apply.

Truth of the matter is, all kinds of factors are used by the insurance industry that can affect your rate over time, and it's not only dependent on your driving record. Luckily, many companies will offer discounts to help offset the increase in your premium rate. As an independent insurance agent, A-MAX Auto Insurance works with over 20 different insurance carriers and we will always work to get you the lowest rate possible with the best coverage options for your individual needs. If you have had a recent rate increase, call 800-921-2629 and get a quote with A-MAX Auto Insurance to see how much we can save you! With over 100 locations across Texas, A-MAX is committed to keeping insurance affordable for all.


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