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Understanding Auto Insurance: What Makes Rates Go Up?

Insurance RatesOne of the hardest conversations for an insurance agent is when a safe driver with no accidents or violations wants to understand why their rates went up.

Insurance rates are based on a number of factors. And, while you do have some control over your driving history and speeding tickets — there are several uncontrollable factors that cause your rates to go up:

1. Increasing repair and medical costs.

A simple fender bender with a newer, tech-equipped car can cost much more than a fender bender with an old car without that technology. The cost of medical care is also rising.

2. The uncertainty of the uninsured.

Car insurance is legally required in Georgia, but there are still drivers on the road without protection. According to the Insurance Research Council, 1 in 8 drivers are uninsured and the amount of uninsured claims insurance companies are paying continues to rise.

3. More drivers means more accidents.

One of the biggest reasons car insurance rates are going up across the country is there are more drivers on the road than ever before. And with higher speed limits and an increase in distracted driving, more drivers on the road means more accidents, which leads to higher insurance rates.

4. Attorney Involvement.

Contrary to their advertising campaigns, the only time an insured should be calling an attorney after an accident is if the insurance company won’t cooperate and/or if either of the parties can’t reach an agreement as to the settlement amount of the claim.  As a result of unnecessary lawsuits insurance companies are forced to pay larger-than-usual settlements, and this effects everyone’s rate.

5. Insurance Fraud.

Fraud, and the cost to fight fraud, is on the rise.

Ways you can take control of your auto premium

Here are some ways you can find the coverage you need at a price you can afford.

  1. Review billing and mailing preferences. Many insurance companies now charge a monthly fee for receiving bills by mail.  There is usually a discount for electing auto pay each month and for paying in full.  
  2. Discounts. Ask your agent about all discounts for which you could qualify.  Some of the common discounts available are for taking a defensive driving course, bundling your insurance portfolio and adding a usage-based insurance product that tracks your driving habits over a set period of time.  
  3. Discuss deductible and coverage options.  Check in with your agent annually at renewal to see if any coverage changes are necessary.  Are you driving your car less, is it over 10 years old, are your children away at college? These are some situations that may cause a change in your rate class and coverage needs.
  4. Credit.  Almost all insurance companies are credit based now, meaning a soft pull on your credit history is used to determine your base premium.  The better your credit score, insurance premium payment history, and loyalty the better your premium.

 

Rachel AmbercrombieRachel Abercrombie is a licensed insurance agent, wife, mom and lover of the great outdoors!  She opened her East Cobb agency in 2013 and serves clients all over metro Atlanta.

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