When it comes to insurance, it's important to understand why your rates may go up. There are a variety of factors that can cause your premiums to increase, including comprehensive claims, young drivers, credit score, filing a claim, and more. In this article, we'll explore the three main reasons why your insurance rates may increase.
Depending on your insurance provider and the state in which you live, your rate may increase due to incidents beyond your control. Insurance companies use complex algorithms to calculate prices, which means that each insurer will offer a slightly different rate to the same driver.
Young drivers pay more for car insurance, as they are considered to have less experience and are more likely to be involved in an accident.
If you live in California, Massachusetts, or Hawaii, you're in luck; these states don't allow auto insurance companies to consider your credit score when setting rates. Statistically, teens are more likely to cause car accidents than the average driver, so insurance companies charge them the highest premiums.
All major insurance companies use a credit-based insurance score to calculate premiums when allowed by law. On the other hand, if you have good credit, you can save money on car insurance in the other 47 states. Hawaii, California and Massachusetts have laws that prevent insurance companies from using age to determine a driver's premiums. Your marital status is also an important factor when it comes to your car insurance premiums because married drivers are statistically the least likely drivers to be insured, with up to 50% fewer accidents compared to all other drivers.
Since the year, make and model of your car will affect your insurance premium, it's important to check quotes before buying a new car to find out how much you should budget for insurance. Filing a claim will increase auto insurance premiums from 3% to 32% on average for three to five years in almost all cases. The cost of car insurance generally declines the most between 18 and 19 years of age, when rates drop by approximately 25% on average. As a result, you may be charged more if you have a lower credit score (some states, including California, prohibit insurers from using credit ratings when setting rates).