Do Insurance Premiums Increase Every Year?
Those maintaining their auto insurance coverage often wonder if their payments increase every year or even every renewal and the answer is sometimes yes. This is not to say that rates cant decrease depending on a number of variables. But very often, they do rise. Lets look at why this happens.
What Makes Premiums Increase Yearly?
Whether your auto insurance is raising yearly or with each 6-month renewal, it can be pretty disheartening to realize youre paying more than you did just a month earlier. So what exactly creates these random leaps in price?
- New vehicle cost adjustments. Often times, what makes premiums increase when you renew your policy is an increase in the prices of new cars. Think about it; the more a car costs, the more it will cost to cover any of its damages. So some people see increases based on how industry prices are affected.
- Used cars cost more to fix. As newer cars become older, yet still have more advanced features than models of years prior, you can expect repair costs to be exponentially higher. Of course, auto insurance companies have to cover repair bills, which mean they may raise rates based on repair costs industry-wide.
So What Can Make Auto Insurance Rates Decrease?
While industry adjustments often dictate rate increases, there are many more ways to get your auto insurance to decrease:
- Be a good driver. One of the best ways to make sure your rates stay low is to avoid reckless driving that can result in accidents and violations. Even a simple speeding ticket can increase your insurance by 30%, so if you stack on violations, youre guaranteeing higher rates for yourself.
- Have good credit. Another strong determinant in what makes premiums increase or decrease is your credit report and score. If you have a lot of adverse accounts, open accounts, or even inquiries made to your reports, you can see hikes in your premium of up to 35%. So by maintaining good credit over the life of your term, you will likely see your rates lower.
Making the right financial decisions is more important than ever in a tough economy. By paying attention to what makes premiums increase, you are giving yourself access to lower auto insurance payments, which can save you tons of money.