Why Did My Car Insurance Company Raise My Rates?

Last Updated on July 31, 2020

Have you been shocked by your latest car insurance bill? You’re not alone. Every year, drivers across America get surprised by higher car insurance rates.

Why do car insurance companies raise rates? Do insurance prices increase with inflation – or are there other reasons for higher insurance rates? Today, we’re explaining some of the reasons why car insurance companies will adjust rates.

Why Did My Car Insurance Company Raise My Rates?

There’s Mismatching Information on your Insurance Application

Sometimes, you accidentally fill out incorrect information on a car insurance application. You might write that your car is a 2012 Kia Optima when it’s really a 2014 model, for example. Your car insurance company will give you a quote for a 2012 vehicle, only to raise rates later when they determine that it’s really a 2014 model.

In other cases, you may have entered incorrect information about your driving history. The insurance company discovers this error during the underwriting process. Failing to report an accident, for example, could significantly increase your car insurance premiums after the discovery process.

Ultimately, if your car insurance policy is more expensive than your original car insurance quote, then it may be due to mismatched information on your application.

Your Credit Score Changed

If you’ve noticed a significant difference in your car insurance policy when it’s automatically renewed, then it could be linked to changes in your credit score. Many car insurance companies use your credit-based insurance score to assess your risk factor. Generally speaking, drivers with higher credit scores are less likely to make a claim than drivers with lower credit scores.

If you’ve recently declared bankruptcy, missed a bill payment, or modified your credit in other ways, then you might notice higher auto insurance prices on your next renewal.

Alternatively, if you have a good credit score, and your insurance company tells you that your rates are higher due to a bad credit rating, then it could mean your identity has been stolen.

You Moved to a New State

The United States is a single country, but each state has vastly different laws regarding auto insurance. Car insurance premiums in the most expensive states are triple the price of premiums in the cheapest states. If you’re moving from, say, Idaho to Michigan, then you will likely pay more for car insurance. The same goes for moving from North Carolina to California, or from Maine to Florida.

The reason some states have higher insurance rates is simple: some states have higher coverage requirements than others. Some states require just $10,000 of liability coverage, for example, while others require $60,000. Additionally, some states are no-fault states, which means your own insurance company pays even when you’re not at-fault for the collision.

Some states just have a higher cost of living than others. It might cost more to repair a car in California, for example, due to higher labor costs. The insurance company passes these costs onto consumers.

You Moved to a New ZIP Code

You don’t have to move across states to pay higher insurance rates. If your ZIP code recently changed, then you may need to pay higher insurance rates.

The reason is simple: your insurance company uses your ZIP code to calculate your insurance premiums. Certain ZIP codes have higher accident rates than other ZIP codes. Some neighborhoods have high crime rates, which could cause your comprehensive coverage to increase. Car insurance prices can vary widely between ZIP codes – even if you’re within the same city.

You Got In An Accident

Obviously, if you’re involved in an accident, then your auto insurance rates will go up – assuming you were at-fault. The more at-fault claims you make, the higher risk you are to insure, and the more you’ll pay for car insurance.

You Received A Moving Violation – Like a Speeding Ticket

Most drivers know that car insurance premiums increase after an at-fault accident. However, some drivers are surprised to learn that premiums increase after moving violations – like a speeding ticket.

Your car insurance company might ignore a single moving violation – especially if it’s your first moving violation after years of safe driving. However, if you frequently receive speeding tickets and other moving violations, then it suggests you’re a risky driver, and you’ll pay higher insurance premiums.

Your Discounts Lapsed

Why did your car insurance rates increase? Maybe a discount lapsed or disappeared. You may have qualified for a certain discount when you first purchased your car insurance, but that discount is no longer available.

Some insurance companies offer a “switch and save”, discount, for example, where you pay discounted insurance rates when switching from a competing company. The discount lasts for the first 6 months after making the switch.

Or, you may have lost your safe driving discount after being involved in a minor accident. Or, your good student discount might have expired after graduation.

You Bought a New Car

If you switched to a new vehicle, then your car insurance premiums might change. The value of the vehicle has changed. Your new vehicle might have different safety features.

You Made a Major Life Change

Major life events can have a significant effect on car insurance prices. Getting married, for example, can cause car insurance prices can drop. Getting older can lower car insurance prices when you’re 20 or 30. But starting in your late 60s and 70s, each birthday can cause car insurance prices to rise.

Conclusion: Compare Car Insurance Quotes After your Company Raises Rates

If your car insurance company just raised your insurance rates, then it’s a great time to compare car insurance quotes. Your premiums may have increased at your current car insurance company, but that doesn’t mean they’ve increased across all car insurance companies. Take a few minutes to compare quotes online today.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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