Why does car insurance go up every year?

The cost of car insurance generally goes up every year due to factors such as inflation, cars becoming more technologically advanced and thus more expensive to fix, and the increased intensity of natural disasters. Changes to your driving record and auto insurance policy can also cause your rates to increase. These changes can include traffic violations going on your driving record, losing discounts, and adding other drivers to your auto policy, especially if they are inexperienced.

Why Car Insurance Rates Go Up Every Year

• Inflation: When inflation rises, so does the cost of everything else, including medical expenses and car repairs due to accidents. So, your insurer might raise the price of your premium to offset the dent inflation can make in their profits.

• Increase in car costs: As cars have become more technologically advanced, the average cost for new and used cars has increased, making them more expensive to insure.

• Rise in the cost of bodily injuries and property damage: The cost of medical care for bodily injuries and repairs for property damage has also increased over the years, leading to a rise in insurance rates.

• Frequent wildfires and storms in your area: With the rise in frequency and severity of natural disasters over the years, insurance rates have increased to compensate for insurers’ losses. If your area experiences a lot of storms, wildfires, floods, earthquakes and other catastrophic events, your insurance rates are especially likely to go up.

• Increase in motor vehicle theft: Vehicle theft has increased in recent years, helping push insurance rates higher as well. An increase in auto theft results in greater losses for insurance companies and more risk moving forward, so insurers raise premiums in response.

Other Reasons Car Insurance Rates Go Up & How to Save

There are other reasons your car insurance rates can go up, though the increase may not be every year. For example, the rates of car insurance claims and car accidents fluctuate over time, and increases can result in higher insurance premiums. Losing discounts because you no longer qualify, changing ZIP codes, getting into accidents, increasing your insurance coverage and getting traffic violations on your driving record can also increase your insurance rates.  

Despite the many components that contribute to car insurance rates going up, there are ways to lower your rates. You can lower the cost of your insurance by increasing your deductibles, reducing coverage and, most importantly, shopping around for discounts and cheaper rates from other companies.

To learn more, check out WalletHub’s guide to the factors that affect car insurance rates.