5 Factors That Can Cause Your Premium to Change

recreational vehicle driving on road by a lake

A premium for auto insurance is the cost you pay for it. What you pay depends on a variety of factors. What are some of these?

Sometimes, what you pay can change due to the actions you take. It is always essential to work closely with your car insurance agent to know when this can happen. It could save you time and money to have a bit of warning about some changes you can control. Others, you cannot. Here’s a closer look at common reasons for auto insurance premium adjustments.

#1: Your Driving Record

The most common reason for a large increase in your premium is a change to your driving record. Reckless driving, such as speeding or causing an accident, is one example. You may have numerous tickets added to your driving record. Were you involved in an accident? This can cause a significant jump in your costs. Sometimes, different infractions will result in different cost changes. Some might prove minimal, others significant.

#2: A Large Claim

Sometimes, claims are not likely to impact your driving record. For example, if you have to file a claim for a small collision, nothing is likely to change. Any changes might prove small, especially if the accident was not your fault. On the other hand, if the vehicle is a loss (or totaled), this may lead to an increase in your premium. Multiple claims in a short period of time are also likely to create a higher cost.

#3: You Adjust Your Coverage

Changing the type or amount of coverage you have plays a role, too. If your car is older and has little value, you may elect to reduce your vehicle coverage and just keep liability insurance. This lowers your premium. But, it also lowers your protection. Adding additional coverage options increases it.

#4: You Bundle Coverage

A good way to reduce your premium cost is by bundling your coverage. You and other drivers in the home move onto one policy. Many cars on one policy often cuts the overall cost relative to multiple policies. Another way to do so is by bundling home and auto insurance from the same provider.

#5: Inflation

A common, uncontrollable type of premium increase simply relates to inflation. When the cost of insuring a person or an area rises, this creates increases in premiums. This is not something you can control, but you can request a new car insurance quote to look for a discount.

Costs change. However, maintaining a good auto insurance policy is critical. Determine if you have a policy that meets your needs as a primary step.

FAQ’s About 5 Factors That Can Cause Your Premium to Change

What is a premium in insurance?

A premium is the amount of money an individual or business pays to an insurance company for coverage.

What factors can cause my insurance premium to change?

Several factors can cause your insurance premium to change, including changes in your driving record, claims history, credit score, location, and the type of coverage you have.

How does my driving record affect my insurance premium?

If you have a history of accidents or traffic violations, your insurance premium may increase because you are considered a higher risk to insure.

What is a claims history, and how does it affect my premium?

A claims history is a record of past insurance claims you have filed. If you have a history of filing many claims, your insurance premium may increase because you are considered a higher risk to insure.

Can my credit score affect my insurance premium?

Yes, your credit score can affect your insurance premium. Insurance companies use credit scores as a factor in determining risk and setting rates.

How does my location affect my insurance premium?

Your location can affect your insurance premium because some areas have higher rates of accidents, theft, or other risks that may increase the cost of insurance.

What is the difference between liability and comprehensive coverage?

Liability coverage pays for damage or injury you cause to others, while comprehensive coverage pays for damage to your own vehicle or property from events such as theft, fire, or natural disasters.

How can I lower my insurance premium?

You can lower your insurance premium by improving your driving record, maintaining a good credit score, choosing a higher deductible, and shopping around for the best rates.

What is a deductible, and how does it affect my premium?

A deductible is the amount you pay out of pocket before your insurance coverage kicks in. Choosing a higher deductible can lower your premium, but it also means you will pay more out of pocket if you have a claim.

How often should I review my insurance coverage and premium?

You should review your insurance coverage and premium at least once a year to ensure you have the right coverage for your needs and are getting the best rates possible.

Health Quote Request

Fill out the following form as completely as possible. Once you have completed the form, click the Submit button to send your information. Your request will be handled promptly.
Skip to content