4 Tips to Avoid Insurance Rate Increases

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Owning a car in the US is necessary for most, since distances are quite considerable and time flies.

You can’t avoid it, but you may be able to cut some common expenses commonly linked to car ownership, such as insurance rate increases. Some increases are unavoidable, but others might be.

Why Do Car Insurance Rates Increase?

All insured drivers ask themselves this question, yet very few of them know the answer. The fact is there are several variables affect the auto insurance rate of premiums.

What You Cannot Control

Companies decide prices, and even though you may be able to negotiate certain aspects of your insurance, flexibility isn’t a common attribute in the insurance market.

New Technology

According to the Federal Consumer Price Index, auto insurance rates experience a 3 to 4 percent increase every year. However, increases have grown even more in the past few years. The latest automobile technology may be convenient but it also comes at a price, since car parts are more expensive and difficult to find.

Additionally, safety standards have improved to such a level that cars can be completely destroyed in an accident as a means to keep the driver and passengers safe, feature that has definitely had an impact in the costs car insurance companies have to cover.

Payment for Liability Claims

When insurance companies face an increase on the claims they have to provide coverage to, they may adjust their insurance rates for the following year to be able to pay for future claim-related expenses.

More Claims in Your Area

Has the traffic accident rates gone up in your district? Has car vandalism increased in the last few months? These patterns influence insurance rates, becoming less affordable.

What You Can Control

Fortunately, there are certain things that are under your control and if you have experienced an insurance rate increase, the following might provide the explanation for it:

A Change in Your Credit Score

Insurance companies use credit scores to determine the risk an insured driver poses. Is there anything you might be able to do about it? Overall, keeping your finances under control should be enough. Make sure you purchase items you can pay and settle such debts in time.

Traffic Violations

It shouldn’t come as a surprise that traffic tickets can cause your insurance rate to increase considerably, especially if these violations are serious. Minor infractions such as speeding or failure to yield will lead to a lower increase percentage, while major violations such as careless driving and DUI will increase insurance rate exponentially.

Driver’s Age

Age generally leads to more experienced drivers, yet, unfortunately, it can also lead to an insurance rate increase. This rise is aimed mostly at drivers over the age of 70, mainly due to the fact that their driving reflexes decrease.

Change of Address

Moving out of your current district or state can have a very real impact on your insurance rates. States and districts where insurance claim numbers are high tend to have more expensive insurance costs, so in order to avoid such increase it’s best to move to safer areas.

Important: Metropolitan areas are usually more expensive than the suburbs.

How to Avoid Insurance Rate Increases

Fortunately, not every insurance rate increase is unavoidable. Consider the following tips to keep clear of these unnecessary rises.

Avoid Traffic Violations

Evidently, no one wants to be the party at fault in a car accident or in other traffic violations, but the rate increase may lead to a more careful attitude while driving.

Under no circumstances should you ever drive under the influence of alcohol or drugs. Apart from the fact that these behaviors can inflict considerable harm on yourself and others, it will automatically increase insurance rates.

How to Avoid an Increase Due to a Minor Violation

There are two ways to avoid an auto insurance rate increase:

  • Plead not guilty in court. If you win, your driving record will remain clean.
  • Get a minor violation forgiveness. Some insurance companies offer this option to drivers, although this solution can only be used once.

Bear in mind that even if you are in a minor car accident, you still need to inform the insurance company of such incident. You might be considering paying the expenses yourself, but should the opposite party sue, your company will learn of the incident and raise your premium, not only because of the car accident, but also because you failed to follow insurance instructions. When it comes to insurance, honesty is definitely the best policy.

Keep Your Vehicle in Excellent Condition

Car trouble can lead to considerable expenses, which is why frequent inspections are crucial to prevent further complications. Although buying a new vehicle might seem like the easiest way to avert future malfunctions, it might actually be even more expensive. Upgrading your car provides insurance companies with the perfect opportunity to raise your insurance rate, since this new vehicle will definitely be more valuable than your older one.

Spend More on Your Deductible

A rather unusual yet effective way to prevent higher insurance rates is to pay a higher deductible. By doing this, premium costs tend to decrease. For instance, a $300 deductible increase (from $200 to $500) could reduce your insurance rate by 15 to 30 percent.

How to Get Discounts

There are several discounts available you may qualify for that could help lessen your insurance rate expenses. Drivers who travel less than 10,000 miles per year can be eligible for discounts. Additionally, drivers with a low-accident record are eligible for safe driver discounts. To know whether you qualify for these discounts or not, simply check with your insurance company.

Insurance is mandatory and necessary for your peace of mind and road safety. Despite the fact that auto insurance expenses can be considered an investment, you can question the insurance rates and try to find the best way to reduce your auto insurance expenses.