Why Car Insurance Premium Increase? The average price of car insurance has increased more than twice the rate of inflation in the past 40 years, according to the U.S. Bureau of Labor Statistics. The MoneyGeek website investigated this correlation and found that auto insurance costs are increasing at twice the rate of inflation. Insurers can adjust rates to recover some of the lost income due to the recent spike in auto repair costs. There are a few reasons why car insurance premiums have increased so dramatically.
Why Car Insurance Premium Increase?
1. Healthcare Cost
First, healthcare costs are increasing. According to the Centers for Medicare and Medicaid Services, healthcare spending will increase by 9.7% in 2020 compared to the previous year. This means that insurance companies will have to raise premiums to cover these expenses. While you may not see an increase in rates now, it is still wise to expect them to rise over the next few years. In the meantime, take the time to compare the different companies’ rates.
2. Important Factors
In addition to location, age, and car make and model, other factors can affect car insurance premiums. Younger drivers pay higher rates, while older drivers pay lower rates. While younger drivers tend to pay higher rates, those in their middle age and old age may find that their rates begin to rise again. As a senior, you may also lose your driver’s education or senior citizen discount. These factors can make a difference in your premiums.
3. Cost of Medical Care
Another reason why car insurance premiums can increase is the cost of medical care. If your health costs increase, your insurance company will raise your premium. If you need to get more coverage, you should consider adding more drivers to your policy. Moreover, you should compare the different types of coverage offered by different companies. For example, collision coverage will likely increase if you are more at risk for accidents. Bodily injury liability coverage, medical payments, and personal injury protection will increase if your medical expenses rise. In short, it is important to consider the reasons behind your insurance premiums to ensure that you are getting the best value for your money.
4. Distracted Driving
Distracted driving is another reason for a high premium. Drivers who are distracted while driving have higher accident claims than those who are married. However, if you’re still married, your rates may have increased after your spouse’s death. Additionally, adding additional drivers can raise your premiums. Male drivers tend to have fewer traffic accidents than females, so this can also increase your insurance premiums. If you’re a woman, you’ll need to make sure that your new driver is married to a man before adding another driver to your policy.
Keep in Mind
When you start a new policy, your insurance premiums may be higher than the original quote. This is because the insurer has more information about you when you start your policy. If you didn’t enter your car’s VIN in the quote form, you may find that your rates change. If you haven’t added household members to your policy, your insurance company will use a credit-based score to determine your rate.