Why did the cost of my car insurance go up at renewal time?
If your car insurance premium recently went up, there are several reasons why that might be. While some price increases may be caused by factors within your control, others are caused by issues that are affecting car insurance customers across the country. We’ve got the scoop on some common reasons for price increases and some things you can do to help lower the cost of your car insurance.
Pricing factors within your control
There are many factors that go into determining the cost of your car insurance, from your choice of vehicle to your driving habits. These are a few common factors within your control that may cause your premium to go up at renewal time:
- You’ve been involved in an at-fault collision. Generally speaking, your insurance company rewards you based on the number of years you go without making an at-fault claim. When you make a claim following a collision where you’re determined to be at fault, you start over again and have to re-build your claims-free reputation.
- You’ve had traffic tickets or other violations. The more severe the violation, the more of an impact it will have on your premium.
- Your licence has been suspended because of a traffic violation or other serious offence. If your licence is suspended for an administrative reason (e.g., you forgot to renew it or it has been taken away for medical reasons), it shouldn’t affect your premium.
Pricing factors outside of your control
Sometimes your car insurance premium may go up even when you have a perfect track record and nothing seems to have changed. This can be frustrating, to say the least — but you’re not the only one experiencing this type of increase. We’re here to explain what’s happening behind the scenes that’s contributing to industry-wide price increases across the country.
Before we get started, it’s worth noting that car insurance premiums are regulated by the government. If your car insurance company wants to increase its rates, it has to apply to a government body — and its application has to be approved before rates increase. These are a few of the reasons insurance companies are applying to increase their rates:
- Modern vehicles cost more to repair. Many modern vehicles are built with advanced driver assistance systems that involve complex sensors and computerized components, and these vehicles tend to cost more to repair than older vehicles.
- Distracted driving is on the rise. Not only does this mean that the number of accidents is increasing, but the damage that occurs in distracted driving-related accidents tends to be more severe. As the frequency and severity of claims increase, so do car insurance premiums.
- Car insurance fraud is affecting the entire industry. In Ontario alone, the Insurance Bureau of Canada reports that car insurance fraud costs drivers an estimated $1.6 billion each year (or about $236 per driver). Insurance companies are working to reduce instances of car insurance fraud and minimize the impact they have on customers.
- Medical services are becoming more expensive. If you’re in an accident and need physiotherapy, for example, the cost of an appointment is likely higher today than it would have been in the past. Insurance companies have to factor an overall increase in medical expenses into their premiums.
- Trends in your area show that you’re now at higher risk for collisions, theft, or other incidents. Insurance companies need to charge their customers enough that they will be able to pay all claims that are made — so as your risk of making a claim increases, so will the cost of your insurance. Your premium may increase if your insurance company’s advanced analytics show that your area has become more prone to congestion or extreme weather events that lead to collisions, for example.
How you can save on car insurance
As you can see, there are a number of factors that contribute to increased car insurance premiums, and unfortunately you can’t control every detail that goes into the calculation. But the good news is there are plenty of things you can do to lower your premium, from taking advantage of discounts to increasing your deductibles. Get the details here:
If you have questions about your own car insurance policy or you want to make sure you’re getting the best price available to you, reach out to your group’s licensed insurance broker today.
Did this article help shed a little light on car insurance premium increases? Share it on Facebook or Twitter.