2015 saw a lot of auto insurance rates increase in different states across the U.S.Â GEICO and Allstate received a lot of press attention for their increases, but many other companies also had rate changes that may have affected you.Â What causes rates to rise and what can you do about it?Â Letâ€™s dive in and take a look.
Why Auto Insurance Rates Change for Everyone
At the end of the day, insurance companies need to bring in more money in premiums than they expend on claims.Â They use highly sophisticated actuarial processes to figure this out, but sometimes economic and other factors intervene.Â In 2015, many insurance providers raised rates, citing these among other factors:
- Economic growth and lower gas prices resulting in more new cars and more drivers on the road, and more accidents
- Harsh winter weather and bad driving conditions in many states
- Increased costs for auto repairs and medical payments
- Certain cities or geographies demonstrating higherÂ claims activity
Auto insurance is a highly competitive industry so companies try to price their products as accurately as possible to gain customers.Â Also, these companies file rates with each state separately, based on their experience in that market.Â So, if the losses in a particular area exceed the premiums, you can expect rate increases to follow.
Factors Affecting Your Individual Auto Insurance Rates
In addition to over-arching reasons why rates rise, there are many factors that can increase your individual auto insurance rates.Â Here are some of the more common causes:
- Increased annual mileage
- “Points” on your driving record from accidents or tickets
- Adding a higher-risk driver to your policy, such as a teenager
- A more expensive car
- A higher risk zip code
What To Do If Your Premiums Increased This Year
Revisit your policy!Â While thereâ€™s been a trend in insurance to buy direct from the carrier, partnering with an independent agent is still a smart move and hereâ€™s why:
- More insurance companies to choose from in one place â€“ including most of those big brands
- Free online comparison quotes to show you a range of rates
- Less known discounts that can result in big savings
- Ability to re-shop your policy if a driving record or life change raises your rates
- An advocate on your side in the event of a claim
- No fees (and we recommend staying away from brokers that do charge them!)
Insurance agents canâ€™t change your rates, as premiums are set by the carriers.Â However, your agent can save you a lot of time, and help advise you on coverage levels that give you the most bang for your insurance buck!
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.