Many consumers often wonder why their auto insurance rates are so darn high… Some of the reasons are due to specific factors within their control, while others are not.
If you are one of the many consumers experiencing steady climbing rates… Let us help you understand what could be the causing this climb! We understand consumers sometimes feel they are wrongfully charged a higher premium. However, insurance is based on risk probabilities, claim propensity, and characteristics of hazardous risks. KNOWING what causes this data to play against you is crucial in ultimately achieving lower rates where possible.
1. You Have an Adverse Driving Record – This is a very clear explanation and one of the main reasons your rates are climbing. If you have experienced tickets, accidents, traffic violations, etc. on your driving record... You can expect your auto insurance to increase.
2. You Have Undesired Credit History – YES…In the state of Texas, insurance companies are authorized by state law to check credit as a rating factor. This is due to the principal of “claim propensity” … It’s based on statistical data which suggests that drivers with higher credit are less likely to file a claim. It’s similar to the discount for owning a home, having a college degree, etc. Sometimes exceptions to the data will occur…. However, insurance companies have to measure risk with statistical data. It doesn’t always present an accurate depiction on an individual basis… But on a much broader population sample, it proves to be accurate. You may be one of the exceptions to the data… Nonetheless, It’s important to KNOW what factors effect your rate so you can work on improving your risk profile.
3. Youthful Drivers – If you have someone on your policy under the age of 21 (female) and 25 (male), then you could be experiencing a temporary hike in rate due to “youthful drivers”. This is a common occurrence with newly licensed teens. Especially if the vehicles on the policy are high profile vehicles. Some insurance companies will default the driver to the highest profile vehicle. Again, this may not be the case in your individual circumstance and we understand that. We want to inform you so you will KNOW what could be causing the rate increase.
4. Your Claim History is Not Established or Not Preferred – This often happens with younger drivers, but is not limited to just the youth. If you haven’t had insurance in a while, have a lapse in coverage, have several claims on your record, and/or have never had insurance before… You could experience high rates. This is because the insurance companies have no history of how you drive and/or in prior history you filed multiple claims.
NOTE: There is a common assumption that a claim in which you did not directly cause will not affect your rate. This assumption is wrong…. Any claim filed on your auto insurance “can” and most likely will affect your rates. If you file multiple small claims (Ex: $75 Towing) over the course of a few years, it will adversely effect your rate.
5. Geographical Market Data and/or Inflation – Okay…. Some of you are thinking… None of those apply to me? So why is my insurance going up? Well, now we have reason number five. Geographical Market Data and/or Inflation is a common cause for increased insurance rates. For example, Market Data suggests more accidents are likely to now occur in a certain zip code because the population increased in density. Additionally, the inflation of repair costs can also effect rates… A fender bender cost more to repair in 2018 than it did in 2005. These factors are not in the direct control of the consumer… Similar to the increase cost of shoes, clothes, vehicles, food, etc.
Multiple changes continue to disrupt the auto insurance industry. Our goal is to keep you informed as the market experiences these never ending cycles of change. If you have any questions regarding auto insurance coverage, Contact Us. Our licensed professionals will assist you.
ALSO!! Stay tuned for an upcoming blog about “UBI” (Usage Based Insurance) Rates that will soon be a staple in the auto insurance industry. We will explain what you NEED TO KNOW about these changes as they evolve in the future.
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"PROTECTION IS OUR PASSION"
CMI of Texas Insurance Group, LLC