Top 10 Reasons Why Auto Insurance Providers Raise Premiums (and what you can do in response)

Insurance carriers use a variety of reasons to raise your premiums. These include cost of business increases, changes in risk, and your driving or claim history to name a few. There are a few things that you can do in order to combat the premium increase.

1. Call the insurer. Ask them why the premium has increased and what they can do to decrease the cost of your policy. Beware though, this may involve the representative trying to lower your premiums by altering or dropping coverage that might not benefit you in the long run.

2. Avoid accidents and tickets. This is an obvious one, but the most common reason a policy premium increases is an at-fault accident, a ticket or moving violation.

3. Raise your deductibles. A basic step that you can use to lower your premiums is to raise the deductible on your comprehensive and collision insurance. Keep in mind though, that this can hurt you in the long run if you can’t afford the higher out of pocket expense if you do have an accident.

4. Change Insurance Companies. This is one thing most insurance companies hate to hear and sometimes they will work with you a little in order to retain you as a customer. It takes an insurance company, on average 2-3 years to make your policy profitable and the longer you are a policy holder without a claim; the more profitable you are to them. As a result, it is usually in the best interest to try and keep you as a policy holder.

5. Lower or drop your coverage. This is another way to lower your premiums but not something I would advise since it lowers the amount of protection the insurance company will provide you if an accident does occur.

6. Drive your car less. In several states, your premium is partially based on the number of miles you drive yearly. The average is usually between 12,000 to 15,000 miles per year. If you drive less, inform your insurance company and they should be able to provide you rates that reflect your lower than average yearly mileage.

7. Drive an older vehicle. As a car gets older, the premium goes down. Avoid purchasing a new car if you don’t need it because your premium will most likely go up if you acquire a newer vehicle.

8. Drop your collision and/or comprehensive coverage on an older vehicle. If you have a car that isn’t worth much, look to see what you are paying for the coverage. If you are driving a 15 year old Honda Civic, the value of the car may not be high enough to justify having the coverage on there since you will still need to pay the deductible before the insurance company will step in and pay for repairs. Add up the cost of the premium and deductible and compare that cost to the value of the vehicle as a beginning measure.

9. Are you getting all your discounts? Find out if the increase was because the insurance company took off a discount because they hadn’t received the information needed. Did you forget to send in your son or daughter’s school grades and lost the “good student discount”? Did you change insurance companies on a different policy?

10. Do all people listed on your policy operate your vehicle? Most insurance companies ask for you to list all persons close to driving age or of driving age on your policy. If these people do not operate your vehicle, you can exclude them. This means that they will not be covered by your policy if they operate your vehicle.