Auto insurance premiums are set to rise in 2017. Policyholders who’ve filed no recent claims may be perplexed by the increases and wonder what’s behind the changes.
Several macro trends play into the way auto insurance premiums are set. Here are some of the general factors that have the most impact on how rates are calculated:
Miles logged are increasing: According to AAA, Americans are spending more time on the roads. Driving more miles increases motorists’ likelihood of having an accident. There are many reasons why more drivers are on the road, including lower gas prices and a better economy, according to the Washington Post.
More policyholders are filing claims: According to the Insurance Information Institute, the percentage of policyholders filing property damage and collision claims continues to increase, and so do the amounts paid out by insurance companies for property damage liability, collision and bodily injury claims.
Medical costs are mounting: Health insurance premiums and medical costs have been rising at a steady clip in the U.S. Those increases carry over into the costs auto insurance companies incur when drivers and passengers are injured in an auto accident.
Newer models cost more to repair: It’s more expensive to fix newer cars that are filled with more sophisticated equipment and technology. Those providing labor at the body shops need additional training, while the shops themselves need appropriate diagnostic equipment. These costs are passed on to consumers, including auto insurance carriers.
Of course, policyholders may experience rising premiums for individual-specific reasons as well. Here are some of those factors:
Driving accidents and traffic violations: A motorist’s driving record has an impact on premium costs. At-fault accidents and traffic violations with points awarded can affect your premium, though they won’t always cause your premium to go up.
Lifestyle changes: Moving to a home in another zip code where rates are different because of the area’s claims history will affect your premium. Buying a car will also likely cause a change in your rate. Premiums typically rise after a car purchase but occasionally they fall, depending on the purchased car’s insurance profile. A premium might also increase if you change the policy terms such as increasing the amount of coverage or decreasing your deductible.