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Why car insurance rates go up even for safe drivers

Your car insurance premium can increase based on your actions, a change in your demographic, or an external factor beyond your control. You may be able to lower your rates by making a change to your policy or shopping around for different coverage.

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Stephanie NievesEditor & Home and Auto Insurance ExpertStephanie Nieves is a former editor and insurance expert at Policygenius, where she covered home and auto insurance. Her work has also appeared in Business Insider, Money, HerMoney, PayScale, and The Muse.

Updated|4 min read

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Key takeaways

  • Your car insurance rates may go up based on your actions as a policyholder or a change in your demographic

  • External factors beyond your control, like more drivers on the road, can also cause your premium to increase

  • You may be able to lower your rates by making a change to your policy or shopping around for new car insurance coverage

It’s that time of year again: Your policy’s up for renewal, and because you’re a safe driver, you expect your car insurance premium to stay the same, or maybe even go down. But what happens when your car insurance company sends you a notice of renewal with even higher premium rates than you were previously paying? And if you’ve been a safe driver and haven’t filed any claims, why would they raise your rates?

There are several factors that can increase your car insurance premium over time. Adding drivers and vehicles to your policy can affect your rates because of the demographics and potential risks each addition can add to your policy. And separating bundled policies, changing your job or address, or a dip in your credit score can also cause your premium rates to rise.

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Your car insurance rates may even go up because of factors totally outside of your control, like extreme weather events that caused losses for the insurance industry, more drivers on the road, and higher repair costs in your area.

If your rates are going up, there are some ways you may be able to lower your car insurance premiums. Some car insurance companies offer discounts just for switching to them, so you might want to consider shopping around for new coverage, and bundling policies like home and auto might also help you save more with your existing carrier.

Why did my car insurance go up?

Besides filing claims, auto accidents and traffic violations, your car insurance premium can go up based on changes you made to your policy, a change in your demographic, or an external factor beyond your control.

External factors

External factors can cause your premium to rise to no fault of your own, even if you’ve been a safe driver and haven’t filed any claims. If you notice an increase in your rates, talk to your insurance provider to find out the cause. Below are some common factors that can influence your rates:

  • Extreme weather events - Severe weather in your area, such as hurricanes, floods, and hailstorms, can lead to increased claims in your region, meaning losses for the insurance carrier. Your premium rates may rise, as a result, because insurance companies need to offset the high number of claims.

  • More drivers on the road - Frequent driving leads to more accidents and more claims, so the more cars there are on the road, the more likely insurance rates will increase, even for the safest of drivers.

  • Higher repair costs - Car insurance companies factor in the potential cost to repair damage to your car in your premiums. If repair costs have gone up across the board, that means your rates may have risen to meet them.

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Changes to your policy

Any changes to your policy can also have an impact on your car insurance premium, specifically any cars or individuals you add to your policy. Every new driver added to your policy is factored into your premium rate, including their age, and driving history.

Even if you’re a safe driver, naming a high-risk driver with a DUI/DWI on their record or an inexperienced teenage driver as a named insured on your policy could cause your premiums to rise because they’re perceived as more of a risk to insure.

Your car insurance rates may also go up if you end a bundled policy or separate your bundled policies. Most car insurance companies offer discounts for bundling multiple policies, helping you save more money on more coverage.

When you initially sign up for auto insurance, you may be offered the opportunity to bundle your auto insurance with your home, condo or other property insurance for a discount. But if you decide to get rid of one of your policies, say your home insurance policy which was bundled with your auto insurance, your premium rate for auto insurance alone may increase because the discount will no longer be applied.

Change in your demographic

Personal information about you and your vehicle plays a big role in how your premium is calculated. Moving to a new location can affect your premiums depending on the traffic, crime rate, and population density in that area.

Generally, the higher the population of your neighborhood, the higher your premium may be because the more people there are in an area, the more chances you have of getting into an accident with another car or person.

Also, living in an area with high instances of auto theft or vandalism can translate as a higher likelihood of filing a claim for such cases which can also raise your premium rate.

Any discounts applied to your policy may also have changed, such as the new vehicle discount, which can help you save on your car insurance premium if your car is newer than three years old. But once your car turns four, that discount may be discontinued because your car no longer qualifies for it.

Car insurance companies also factor your credit score into your premium rate to help better predict how likely you are to file a claim. So even if you’re a safe driver, a dip in your credit score can still present you as a potential risk, causing your premium to go up.

How to lower your car insurance costs

Looking to lower your car insurance rates? Knowing your options can help you take the best course of action, whether that means making a change to your car insurance policy or exploring other options.

  • Bundle and save - Bundling home and auto could qualify you for a multi-policy discount with your existing carrier. Try bundling multiple policies to help you save more money on more coverage.

  • Lower your coverage amounts - If you’re paying too much for auto insurance it may mean you’re ove-rinsured. You need enough coverage to fully pay out the costs after an accident, but if you have the highest level of coverage available you may be paying for more than you need.

  • Shop around for a cheaper policy - Compare quotes from other car insurance companies to find cheaper coverage. Some providers even offer discounts when you switch.

  • Find discounts - Take advantage of discounts related to your occupation, driving behavior or affiliation with participating groups or organizations. There are also discounts for switching to paperless billing, paying your premium in full or signing up for a usage-based discount program.