Catherine C Ford, Writer
@catherine_ford_1
Car insurance rates fluctuate for many reasons, including changes in your driving record, mileage, policy details, credit history and ZIP code. Filing claims can also cause your car insurance rates to change, as can events outside of your control like inflation.
Some of these factors can cause your insurance rates to increase or decrease every six to 12 months, which is when car insurance policies are renewed. For example, traffic violations and accidents can raise your insurance premium, while improving your credit score can lead to lower insurance rates.
Why Car Insurance Rates Fluctuate
- Changes in driving history: At-fault car accidents and traffic violations like speeding tickets and red light infractions may negatively affect your insurance premium, potentially increasing your rates for several years. On the other hand, insurance companies charge lower rates for drivers with a clean driving record.
- Increase in mileage: Car insurance companies factor your reported annual mileage into the cost of your premium, so how often you drive can affect the cost of your insurance. The more you drive, the more likely you are to get into an accident, which can make your insurance more expensive. Obviously, if you have pay-per-mile insurance, your costs will fluctuate a lot based on how much you drive.
- Changes in credit history: Changes to your credit history can affect your insurance rates in most states. Having good credit leads to lower insurance rates, and a negative credit history leads to higher insurance rates.
- Changing ZIP codes: Where you live or move to can have a big impact on your car insurance rates. For example, if you move to an area with high rates of theft, car accidents, or natural disasters, your car insurance rates can go up.
- Filing claims: Filing a claim may affect your insurance rates, although your insurer will take other factors into consideration, such as the cost, type, and severity of the claim, your driving record, and the number of claims you’ve filed recently. Filing multiple claims within a three-year period usually leads to an increase in your insurance premiums.
- Making changes to your policy: Your insurance will fluctuate if you’ve added or removed drivers and vehicles from your policy, you changed the types of insurance and coverage limits you have, or you no longer qualify for discounts.
- Additional factors: Other factors like inflation or changes in the rates of crime or claims in your area can also cause your car insurance premiums to fluctuate.
For more information, check out WalletHub’s guide on the factors that affect car insurance rates and picks for the cheapest car insurance companies.
People also ask
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.
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