Why Car Insurance Rates Increase?
Obtaining the cheapest and probably the best insurance rate for the first time is no guarantee it will remain the same. Rates may change at any time during the lifetime of the policy. The main reason for this would be a speeding ticket for example. Some insurance providers may ignore the first or all traffic offences, while others may consider it an increase of negligence on driver’s part which constitutes an increase in risk. If the driver’s risk increases, the insurance rate will follow.
Changes in Auto Insurance Market
The insurance industry is a very competitive market and when some companies are under certain strains, they may pass some costs to the customers. This may happen if the insurance provider has been providing some very competitive rates to a driver that has been filing repeatedly for claims. After some math, they may realize that a particular insurance policy is no longer sustainable and will need to be increased to cover the costs involved. Some of the changes implemented by insurers are not isolated to drivers with many claims and can simply be mass increase of costs to cover certain operating expenses. This is not fair to all drivers, but it’s how insurance companies may choose to operate at certain times.
Changes in Insurance Policy
Changing you registered vehicle is another reason why your insurance company may increase you premium. We don’t necessarily changes cars exactly at the time when our insurance policy expired, so this is bound to happen to many drivers. Anytime the vehicle information is updated in the policy, the insurance company will recalculate the premium based on the new data. If you used to drive a small car and have just upgrade to a sport or high performance car, the insurance rate will increase. This is because the cost to repair or replace the new car will be different and this causes insurance companies to revaluate the cost and ask you to pay more. This may also be the time a policyholder may add GAP to cover the difference between the new car and amount owed on a loan. This additional coverage will also increase the rate.
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