What causes your insurance premium to go up? This is an age-old question that we often face. The answer is not always so straight forward. There are many reasons that your insurance premiums can increase, some of them are specific to you and some are not.
Some premium increases are the result of an across the board rate hike. These can happen your insurance carrier and the state department of insurance agree on a new rate plan for the year.
Other premium increases are specific to you and factors such as your driving record, credit score, and more. In the insurance industry, these factors are used to calculate your probability of having to file a claim. The higher the probability, the higher your premium can be. This is because, with a higher probability, you are more of a risk to the insurance carrier.
Claims History. When it comes to your claim’s history, having more claims generally means you are a higher risk. This is because statistically, those who have prior claims are more likely to have claims in the future. Even when they are not your fault.
Credit Score. In some states, your insurer might look at your credit score when determining your premium. This is because some insurance carriers believe that when you have a lower credit score, you are more likely to get into accidents than people with higher credit scores. It is important to note that some states do not allow the insurer to use credit scores when setting rates.
Driving Record. Similarly, to claims history, when a driver has a history of speeding, reckless driving, or driving while under the influence they are more likely to be a risk for the insurance carrier. If your driving record is full of violations, a carrier might make you pay higher premiums or deny you coverage altogether. Your driving record can also affect your life and health insurance as well. Life insurance carriers can consider someone with a bad driving record as high risk when it comes to auto fatalities.
Zip Code. Your insurance premiums are also tied to your address. Depending on your location, they can become higher or lower. This means when you move, you could see a price increase. Certain areas are more populated than others, increasing the risk of an auto accident or might have a higher cost of health care which could increase your health insurance premiums.
Changes in Vehicles. When you add or replace a vehicle on your policy you might see a jump in premium. This is because certain vehicles cost more to insure than others. In the event of a claim, that vehicle could cost more to repair or replace, and these costs are calculated into the premium.
What can you do to help lessen the cost of your insurance premium?
An increase in insurance premiums can be difficult, especially if you were not expecting it. However, there are some things you can do to help control the costs of insurance. The first of these is to drive safely. As we have already discussed, your driving record impacts your insurance premium. You can help to control that impact by following the rules of the road and driving safely. The next step you can take it to improve your credit score. Improving your credit score could improve the cost you pay for insurance. Lastly, you can check for discounts. Many insurance carriers will give discounts if you are a student, in the military, or if you have multiple policies through them. Check with your agent for any available discounts and how to qualify.
Most importantly, talk with your independent insurance agent. Independent insurance agents have access to multiple carriers, Gannon Associates Insurance has access to over 80. If you are not happy with your current insurance premium or you want to remarket your insurance, talk with your agent. We can help to shop around and find you the best price for your needs and budget.
Give us a call today at 844-GANNONS to discuss your options and let us help you get to the right coverage for you.