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Why Did My Car Insurance Rate Go Up? No Accident or Ticket…

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Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency...

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Reviewed byJoel Ohman
Founder, CFP®

UPDATED: Mar 13, 2020

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Sadly, it’s quite possible for your car insurance rate to increase even if you haven’t had a ticket or been involved in an accident.

In short, car insurance rates are determined by “pooling” a large number of people with similar factors or characteristics.

Once these pools are created, a rate is assigned to the group (basically an educated guess based on losses the insurance company had to pay in previous years).

The insurance company’s goal is to charge the group enough money to cover the costs of ALL the accidents they expect the group to have.

Whether or not the insurance company is correct won’t be determined until a few years after the policy term expires.

Much of the delay can be attributed to the fact that many of the expenses for losses incurred by  insurance companies are tied to court costs.

And as we all know, lawsuits often take a number of years to settle. That’s why insurance companies generally offer to settle insurance claims outside of court.

Why Do Car Insurance Premiums Go Up?

Though it seems like car insurance rates are always on the rise, we actually have a lot of control over what we pay and whether or not that rate will increase over time.

We determine our driving record, what car we drive, and any change in coverage or insurance deductible.

Some of the main rating factors auto insurers use to determine what to charge for car insurance include the MVR, C.L.U.E. report, vehicle history and financial responsibility reports.

Each ticket you receive and every claim you file, as well as your overall financial health, will show up on these reports.

[How much does insurance go up after a ticket?]

Car Insurance Companies Typically Look Back 3-5 Years

It is most common for insurance companies to look at a five or three year history to determine your rate, though this depends on the type of car insurance company you choose.

The best way to avoid rate increases is to drive safely and keep financially fit.

Your policy cannot be cancelled mid-term based on the information in these reports, but you can certainly expect to be non-renewed or charged more on your next policy term.

This type of rate increase is associated with liability-only car insurance.

The type of car you choose to drive may also increase your insurance rate.

If you purchase a newer or more expensive vehicle, be sure to factor in an insurance rate increase into your budget.

We also tend to file more claims to repair newer or more expensive vehicles.

More insurance claims always equal higher insurance rates. This type of increase is associated with physical damage coverage.

Also under our control is the amount of liability coverage we elect to receive; almost every state has mandatory minimum liability limits.

But we have the option to increase that amount, which will certainly make your car insurance rate go up.

You also set the deductible for physical damage coverage; if you decrease your deductible, you can expect to pay more for your auto insurance.

Lower deductibles tend to correlate with more claims, as drivers pay less money out-of-pocket for repairs.

Keep in mind that you can always speak with your insurance company or get an online quote to ensure you aren’t being overcharged for your car insurance.

Is It Time to Shop Around?

If you have not had an accident or received a ticket and your rates still rise, it may be time to shop around with a different insurance company.

If you happen to work with an independent insurance agent, call your agent and ask him or her to “shop” your rate with additional carriers, or attempt to find discounts your insurance company may have available for you.

If you do not have an agent, but instead work with a direct insurance carrier, call your insurance company and ask for available discounts, or call other direct insurance carriers for a quote.

Insurance companies typically review your history for accidents and tickets on a three-year timeline.

It is always worth the time to call your insurance agent or direct insurance carrier to request accident forgiveness or ticket forgiveness. Typically it is more common to have a ticket forgiven rather than an accident.

For example, if you’re beginning a new insurance policy on September 1, 2019, and received a speeding ticket on November 15, 2016, it’s certainly worth requesting that the ticket be disregarded when determining your rate. Remember, it never hurts to ask!

Read more: How to lower your car insurance premium.

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