I hear very often from people who recently went through some type of life change and were surprised to find out their auto insurance rate changed. The reason for this change in premium is auto insurance companies use many factors when determining rates.
Knowing what some of these factors are and why they make a difference to insurers can help us better understand our rate changes, if they do end up occurring.
Change of residence
I often encounter clients who have recently moved not far from where they were before, but experienced a premium change. No matter how far you move, if you’re in a different zip code than you were before your rate can change. Zip codes are one of the factors insurance companies often use to determine rates. The claims within each zip code might have a different number of auto accidents, thefts, fraud, vandalism or other issues affecting claims.
Different types of cars cost different amounts to insure. That’s because some cars have more safety features than others and statistically, those driving in car with more safety features have less severe physical injury claims and therefore require less medical care. Also, some vehicles cost more than others to repair or replace. If you’re thinking of getting a new car be sure to talk to your insurance agent first, because often times the rate change can be significant.
Accidents and violations
Following an accident or moving violation, insurance rates often increase. Sometimes this can happen even if the accident is not the insureds fault. Many carriers often offer a claims free discount that will be removed when an accident occurs which will cause an increase in premium.
Adding a new driver to the policy
Adding someone new to the policy can also affect the rate. Often times when parents add a teen driver to the policy they are surprised by the affect on the premium. The reason for this is according to a study by the National Institutes of Health and Virginia Transportation Institute, teens in their first 6 months of driving independently have more crashes than in their next year of driving. Even after the first 6 months, teens are more likely to be involved in an auto accidents and are thus more expensive to insure.
Some cars do become more valuable as they age, if kept in good condition, but most cars depreciate in value as they get older. As mentioned earlier, one factor used to determine rates is the cost to repair the vehicle. In most cases, an older vehicle is less expensive to repair leading to the vehicles being less expensive to insure.
Often it’s helpful when making life changes to check with your insurance agent to see whether or not the change will affect your insurance rates. It’s easy for an insurance agent to quote these changes and the price they come back with may make your decision a little easier.
Have a great Monday!