Factors that affect your car insurance rates

Many people often ask why their car insurance rates change. Although it could appear random, there are valid explanations for why the pricing fluctuates.

Some reasons include: adding extra drivers to your policy, filing claims, your driving record, and your credit score. This article will discuss some factors leading to insurance price fluctuations. We will also give tips on how to reduce insurance costs.

1. Your driving history

Even if you are not at fault, car accidents, speeding tickets, reckless driving, and drunk driving could raise your premiums. Let's compare the amount of driving during and after the pandemic. People started staying at home because of the pandemic in early 2020. In general, they were driving less, which reduced the number of accidents. However, people began reverting to pre-pandemic habits in 2021, such as going out more frequently. Generally speaking, more accidents are likely when more cars are on the road. Moreover, the severity of car accidents has increased.

2. Your car

A new car typically costs more to fix after an accident. Also, new vehicles are more vulnerable to theft or break-ins. Talk to your insurance provider about how your rates will change if you purchase a new car. Remember that some types of vehicles are also highly susceptible to theft. Thieves also prey on cars with expensive parts.

3. Adding a driver to your coverage

All the above factors may affect your rate if you add another driver to your policy. As you might expect, the high risk of new drivers can generally increase your speed, especially if you add a young driver.

4. Data specific to your area

When figuring out your rate, insurance companies look at more than just your car and how you drive. For example, the following things may cause your insurance bill to go up for no apparent reason:

Criminal activity

Risk of natural disasters

Insurance fraud

Risk of accidents

Uninsured or underinsured drivers on the road

5. Inflation 

Due to labor shortages and problems in the supply chain, auto repair prices have risen. When calculating premiums, insurance firms must consider these increases.

The value of most automobiles is increasing, whether new or used, which is another factor affecting the auto insurance market. Used automobile costs have increased by 26.4%, while new car prices have increased by about 9.8%. 

There are a few reasons for this. First, the demand for cars, SUVs, trucks, and their parts has increased while the supply is decreasing worldwide. And you know, there is always a demand for new cars.

Furthermore, critical parts like semiconductors, which are needed for the processors in modern cars, could not be made during the pandemic, reducing the number of cars on the market. 

Although production has begun, there is still a need for more compared to the demand that has been building. As a result, many new automobiles and the parts used to make them are also languishing on ships and docks in the United States, waiting to be trucked to dealerships and manufacturers nationwide. 

Consequently, repairs and replacements cost more since cars and parts are more expensive. So the average car insurance claim price has since increased.

6. Changes in discount policies

When you purchase your first policy with a car insurance company, they might give you an introductory discount. Check your statement and contact your insurance provider if you have any questions.

Comparing shops to ensure you are receiving the greatest deal is crucial. For example, many different auto insurance savings are available from Tennessee Auto Insurance Agency, ranging from going paperless to getting a new policy before your current one expires. In addition, you can tailor your insurance so that you only pay for what you need and receive discounts. Click here to get a quote.

Your options for lowering insurance prices

There are things you can do to assist in keeping insurance price hikes in check, even though some of them are beyond your control.

Driving safely and responsibly is advised. Ensure that everyone covered by your insurance follows the rules of the road and drives carefully, especially in challenging situations and bad weather. This will help you avoid getting tickets and having accidents that raise your insurance costs.

Enroll in telematics

Why not use telematics to save money if you and the others covered by your policy drive defensively and safely? Telematics continuously gathers data about your driving patterns. If you sign up for a telematics program, you can save money on the first few months of your car insurance. Safe driving practices can result in savings at renewal, while riskier practices could result in a higher premium.

Modify your settings to be a digital customer

Customers who participate digitally may see their premiums reduced. These discounts are given to paperless customers who sign up through the carrier's app. 

Study the coverage

Review your auto insurance and other coverage with your insurance agent. They can determine that you are carrying extra or redundant protection. They might also have some suggestions for ways to reduce the cost of your insurance.

Increase the deductible

Increasing your deductible can frequently reduce premiums. But remember that the deductible will be your responsibility out-of-pocket, so you should always keep enough cash on hand to pay it in case you need to file a claim.

Look for specials

Check to see if you are eligible for discounts, such as those for having more than one policy, using EFT (Electronic Funds Transfer), or being a good student. 

Make the most of your car insurance

Find out if your insurance company can give you extra perks for driving safely on top of the standard coverage. For example, Tennessee Auto Insurance Agency offers: Multi policy discounts, transfer discounts, and multi vehicle discounts.

In conclusion

Factors that may affect car insurance prices are sometimes out of your control. However, some common reasons for price increases are recently filed claims under your policy, traffic tickets, and driving while intoxicated.

The prices can also increase if there are more claims in your neighborhood. In that case, there may be more weather-related mishaps, higher theft rates, more vandalism, or other problems that the insurer must pay for. Or if you relocated to a location with a higher crime risk than where you were previously a resident.

Talk to our agents to learn more about auto insurance and money-saving discounts.

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