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6 Reasons Why Insurance Rates May Increase

By February 16, 2024Insurance
Arrows going up the wall

Insurance premium adjustments can take place from one policy term to the next. Reasons why insurance rates increase include your driving record, insurance claims, and the rising costs of repairs. The following are some instances where your insurance premium is likely to increase.

1. Increase in Accidents and Claims

Insurance companies may at times have to pay more in claims than what is gained from premiums. When the rate of car accidents increases, more policyholders will be making a claim leading to more payouts. When this happens, the premium rates are likely to go up for all policyholders, even if you are a careful driver. Accidents are likely to increase with the rise in the number of drivers on the roads. This means an increase in claims. Accidents caused by distracted drivers will also contribute to the increased insurance rates. Insurance companies may need to increase rates if there is an increase in the number of uninsured drivers on the road. This shows that insurance premiums in most cases will increase and not decrease when the rate of road accidents and claims are higher.

2. Increase in Car and Home Repairs

Costs to rebuild a home continue to increase astronomically. Inflation on the cost of building material and the needed labor is why homeowners insurers have to raise insurance rates. Costs to repair cars have also gone up. Although your vehicle maybe a year older, the cost to repair continues to rise. Body shop labor rates are not cheap for good reason. You want qualified body shop employees working on your vehicle. In addition, technology like sensors and cameras in your car can make a simple dented bumper into a costly repair. Also, the cost of liability claims continues to rise. The increases in repair costs have affected different regions, including Laconia, NH.

3. Auto Insurance Policy

Car insurance covers more than your car. Other variables are covered in your insurance policy that makes insurance rates increase instead of decrease. Your car insurance company is concerned about injured parties and covers bodily injury, property damage, and loss of income. Other coverage includes medical payments, underinsured motorists, loss of use, funeral expenses, uninsured motorists, and rental reimbursement. All these variables contribute to an increase in your insurance rate.

4. Claim History

When insurance companies look at your history of claims, their rating metrics dictate whether to increase your premium or not. Homeowners insurance companies usually share claim history for the past five years. When your record shows that you frequently make claims, that means you are likely to make another one. For this reason, your insurer can increase your rates. Car insurance can also increase if your history shows that you have frequent claims. Making many claims in a small period of time is typically worse than suffering one larger claim in that same time period.

5. Driving Record

Your driving record like accidents, tickets, or driving for more miles than you usually do can affect your insurance premiums. When you make more claims or get more tickets, your insurance rates are likely to go up. Some violations that can cause your rates to increase include speeding, reckless driving, or driving under the influence.

6. Natural Disaster

Natural disasters can cause an increase in insurance rates. When natural disaster strikes and the damages are extreme, affecting many homeowners, it means many policyholders will be making claims. With many policyholders receiving payouts, insurance rates are likely to rise. All policyholders will be affected.

For example, if you live in areas prone to bad weather conditions, insurance prices are likely to increase if homes and cars are frequently damaged by the weather. A natural disaster resulting in road accidents and home damages can lead to more claims. Also, a state that experiences a higher number of winter crashes may experience an increase in premium rates.

Insurance rates fluctuate for several reasons. While a single claim may not trigger high insurance rates, frequent claims will absolutely lead to an increased rate. Other factors, including inflation rate, natural disasters, and your driving record are possible causes of increased rates. Have our trusted agents work up a quote on your behalf. As an independent agent, The Insurance Outlet can shop numerous carriers to best match your risk characteristics with the carriers that are providing the best value. We balance between cost, coverage, and ease of doing business.

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