Why did my auto insurance go up for no reason

If you’re at fault in an accident or rack up a few speeding tickets, you won’t be surprised when your auto insurance premium goes up. But in cases that don’t involve wrecks and tickets, a rate hike may leave you scratching your head. 

Providers set rates based on certain factors that you can and can’t control. Learn what those factors are and what you can do to reduce your rising car insurance rates.

Insurers apply many factors when they set your car insurance premium and rates for policy renewals.

Many insurance companies use a credit-based insurance score. Factors like your credit history and types of credit, such as loans or credit cards, can affect your car insurance rates. If your credit score goes down, your insurance carrier may raise your rate when it’s time to renew your policy. 

Most states allow credit-based insurance ratings, but the practice is banned in Hawaii, Massachusetts, and California.

What you can do: If your car insurance rate increases due to a drop in your credit score, improve your credit. Pay your cards on time and reduce your balances.

If you’re at fault for an accident, the provider may consider you a higher risk and raise your rates. But, a carrier may also deem you a high-risk driver if you are involved in several accidents for which you were not at fault. An insurer may also increase your rate if you file many comprehensive claims for things like broken windshields, weather damage, or contact with animals, such as hitting wildlife.

What you can do: Avoid accidents. Pay out of pocket for minor damage, such as a cracked window.

Traffic violations, such as driving under the influence and speeding, may prompt your insurer to increase your auto insurance premium. Following a crash, the provider may also raise your rate if you were 50% or more responsible for the accident. The insurer may also apply a price increase for a history of late payments. 

Carriers refer to these types of increases as "surcharges." The increase may remain until you prove that you’re a good driver. The surcharge amount and the length of time you must pay it will depend on the severity of the incident. 

What you can do: Improve your driving skills following an at-fault accident. Avoid accidents. Also, consider adding accident forgiveness to your coverage.

Other factors, some beyond your control, may also lead to a rate increase. 

• Change in marital status: Statistics show that single drivers file more claims than married ones. Your rate may go up if you divorce and, in some cases, after a spouse dies.
• Adding drivers to your policy: If you add a new spouse or a teen driver to your auto insurance policy, the company may increase your premium. 
• Change in gender marker: Female drivers tend to have fewer traffic accidents than males. If you change your gender marker from female to male, the insurer may increase your rate.
• Your location: If claims for collisions, weather-related damages, auto theft, or vandalism increase in your ZIP code, your provider may raise your premium.
• Your car’s make and model: If a spike in claims of your car’s make and model occurs, your carrier may increase your rate.
• Your age: Most often, younger drivers pay higher insurance rates. While your rates may decrease as a young adult and when you reach middle age, they may increase when you reach your 60s.
• Lost discounts: If you’ve earned a good-driver discount and have an accident, receive an employer discount and change jobs, or cancel a policy for which you receive a multipolicy discount, your car insurance rate may increase. 
• Across-the-board rate increase: Insurance companies may increase the rates of all of their policyholders for various reasons. These include an increase in claims, the number of cars on the road, or more accidents involving injuries and fatalities.

Insurance companies can apply many factors to determine your rates, but that doesn’t mean you have no control over your premiums. When it’s time to renew your policy, review your coverages. Drop any that you no longer need. For instance, if you’ve paid off your car, you may consider dropping collision and comprehensive coverages.

Speak with your agent to find out if you qualify for any discount programs. For instance, some companies offer big savings for cars equipped with safety and security devices such as airbags, anti-theft systems, and daytime running lights. Many carriers extend a discount when you bundle home and auto insurance or when you buy more than one auto policy.

You can also save money by raising your deductible. While you might have to pay a little more out of pocket following a covered loss, you can enjoy a lower rate. 

Reducing your annual mileage is a great way to lower your rates.

If you drive a car that costs a lot to insure, consider trading it in for a more sensible ride. Premiums for luxury or electric cars often run high because they cost more to repair.

Car insurance rates are based on a number of factors not directly related to your policy, including your location, age, gender, and marital status. Data about how often people in these different demographics have accidents will influence your rates. In terms of direct factors, your type of vehicle, coverage limits, deductibles, driving, and claims history all play roles. Your insurance carrier may also discount your rates if you purchase multiple types of coverage.

There are several sites online that allow you to compare quotes from different insurers directly. These sites may require you to enter contact information, and you may end up getting more than just car insurance quotes. If you'd rather not sign up for more marketing, you can contact a few insurers directly and ask for a quote. Just be sure to request policies that match in coverage and deductibles so you can make an accurate comparison.

Odds are your auto insurance premium dropped in 2020.

Thanks to stay-at-home orders, there were fewer vehicles on the road, which meant fewer accidents and fewer claims. In fact, some insurance companies, including USAA, even refunded a percentage of their members' premiums.

But as much as we all love seeing our insurance rates go down, our reaction is definitely the opposite when they go up. Especially when we're not sure why it happened.

There are many possible reasons for auto insurance rates to increase, and unfortunately, some of those reasons aren't in your control. But understanding the factors that influence insurance rates — and what you can do to keep them low — may help make it less frustrating when it does happen. Here are seven of the most common reasons your auto insurance may rise.

1. Claims in your city or state increased.

Comprehensive and collision insurance covers events like natural disasters, theft and vandalism. A major event in your city or town, such as a tornado, hailstorm or even civil unrest, can lead to an increase in auto insurance claims from drivers in your area.

It's important to note that the costs associated with claims are also increasing: Medical services are growing more expensive, and the advanced technology in newer vehicles costs more to repair.

Even if you don't make a claim, an increase in the number or cost of claims from other people can boost all auto insurance rates — including yours.

2. You moved to a new ZIP code.

Believe it or not, your insurance rate can change even if you only move a couple of blocks away.

Insurance rates consider your ZIP code. If you move to an area that's more densely populated and has a higher risk of theft, your rates will likely increase. If you relocate to the coast, your area might be more susceptible to hurricanes or earthquakes.

Fortunately, the reverse is also true. If you trade in your downtown loft for a more rural lifestyle, you'll likely see your premiums decrease.

3. You were in an accident.

Whether it was your fault or not, getting in an auto accident can come with significant costs, which is the main reason having auto insurance is so important in the first place.

At-fault accidents can almost guarantee that your rates will increase because you're considered a higher risk. And yes, one-car accidents are considered at-fault since there's no one else involved.

In addition, your insurance rates may rise even if the accident wasn't your fault, depending on the policies of your state and insurance provider. Multiple not-at-fault accidents may also deem you a high-risk driver and cause a rate increase.

In some cases, you may be able to avoid negatively impacting your insurance rate by paying out of pocket for minor damage rather than submitting a claim.

4. Your credit score dropped.

Some insurance companies use credit history as a factor that goes into an insurance score, which is used to determine your auto insurance rates. Poor credit history can have a significant impact on your insurance score because research shows that people with lower insurance scores have a higher likelihood of having a claim. If your credit score takes a hit, it can quickly become a double-whammy and drive up your auto insurance rate, too.

Fortunately, this is one of the factors you have a little more control over. Taking steps to improve your credit score, such as reducing your balances and paying bills on time, may also help decrease your premium.

5. You no longer qualify for a discount.

There are many reasons your provider may offer auto insurance discounts. But if you no longer meet the requirements, you'll lose the discount. Some examples include:

• If you received a safe driver discount but get in an accident or receive a moving violation.
• If you received a multi-vehicle discount but choose to remove coverage for one or more vehicles.
• If you received a discount for bundling auto and homeowners or renters insurance but remove your home or renters insurance.
• If you received a discount for a newer vehicle or an anti-theft device but decide to drive an older vehicle without improved safety features.
• If you received a discount because you were driving less or storing your vehicle but then need to start using your vehicle more often.
• If you were receiving a discount for being a loyal member but choose to switch providers.
• If you were receiving an employer discount but change jobs.

Age and marital status can also impact your rate. As a general rule, middle-aged drivers typically have lower insurance rates than young and senior drivers, and married drivers often pay less than single drivers. Growing older or changing your marital status may influence that invisible "discount" — for better or worse.

6. Insurance fraud.

Unfortunately, some people make fraudulent or exaggerated claims to get money from an insurance company. It can be as big as fraudsters who fake injuries and vehicle damage or as seemingly small as contractors who inflate the cost of repairs.

Although individual claims may seem insignificant, the collective impact of fraud leads to higher insurance rates, increased taxes and inflated prices across the board. Protecting yourself from fraud can help keep insurance rates low.

7. Rate adjustments.

When an insurance company revises its rates, it's usually a result of the rising costs of doing business — which can occur due to things like an increase in claims, growing risk, inflation or service improvements.

Auto insurers are also required to keep a certain amount of money in reserve as a safeguard to pay for unexpected claims. If your provider needs to increase their reserve funds, they may choose to raise premiums.

Keep in mind that insurance premiums are strongly regulated by your state, and rate increases must go through a complex review and approval process.

Some states allow insurance companies to file and use new rates while they're under review. If the state doesn't ultimately approve the rate increase, customers who paid the higher rate during the review period will receive a refund.