Auto Insurance
6 min read

Why Did My Car Insurer Jack Up My Rates At Renewal?

Published on
March 28, 2023

Got sticker shock after seeing your recent car insurance bill? Are you asking yourself, "Why did my car insurance go up"? It can be frustrating to see a rate increase on your policy during renewal, especially if you have a perfect driving record.

There are some factors that cause auto insurance to increase, and unfortunately not all of them are in your control. We’ll break down why your car insurance company may have hiked up your rates, and what you can do in response.

Do All Car Insurance Companies Raise Their Rates Annually?

Your insurer typically can’t raise your rates at any time. Most car insurance policies last between 6-12 months, and when the term is up, your insurer can decide if they want to keep insuring you at the same rate.

If you’ve become riskier to insure, your insurer may raise your premiums, or they may choose to not renew your policy.

Understanding How Insurers Determine Your Rates

Many factors go into determining your car insurance rates, and understanding how insurers calculate premiums can help you make informed decisions about your coverage. One of the key factors is your driving record. Your driving history, including accidents and violations, plays a big role in determining your rates. A clean driving record can result in lower premiums.

The type of car you drive can also impact your rates. Cars that are more expensive to repair or replace, or have a higher likelihood of being stolen, can result in higher premiums. Where you live and park your car can also impact your rates. Areas with higher rates of theft or accidents can result in higher premiums.

Insurers consider age and gender when setting rates. This is usually decided by the state, not the car insurance company. However, they can lobby to change this (even though that’s unlikely to happen).

Your annual mileage can also play a role in your rates. The more you drive, the higher your risk of being involved in an accident, so insurers may take your annual mileage into account.

Finally, the coverage limits and deductibles you choose can impact your premiums. Higher coverage limits and lower deductibles can result in higher premiums.

Other Reasons Why Car Insurance Companies Raise Their Rates?

Your insurer may also raise your rates based on where and how you drive. Or, your insurance went up for reasons that are completely out of your control. Here are a few reasons why your car insurance company may raise your rates.

Economic factors

You’ve probably been hearing the word “inflation” a lot recently—it drives up the cost of pretty much everything, from groceries to airfare. It also affects insurance costs, too: Most car insurers will raise their rates every year to keep on pace with inflation.

Car insurance rates are expected to rise an average of 8.4% across the country in 2023, the largest increase in six years. While average premiums vary by state, drivers can expect to pay an annual $1,780 for coverage.

Jonathan Seibold, Head of Insurance at LOOP, explains that during the COVID-19 pandemic, car supply chains were disrupted and new and used car prices shot up. Pricer cars combined with increased car parts and repair costs make cars more expensive to insure.

There are also more cars on the road, which leads to more accidents and violations. The more claims drivers file, the more insurers need to raise their rates to cover them.  

“Everything with insurance comes down to how much they expect to lose on a claim,” said Seibold. “When costs go up for repairs and the severity of accidents goes up, insurers need to raise their rates to balance that.”

And a low credit score can also raise your insurance premiums.

You got a speeding ticket or moving violation

The more violations on your record you have, the riskier you are to the insurer, and the more likely it is that your insurer is going to raise your rates to cover that extra risk. Even minor incidents can increase the cost of your insurance.

You got into an accident

An accident can lead to a rate increase, even if you weren’t at fault. Similar to a speeding ticket or moving violation, insurers view both at-fault and not-at-fault accidents as a sign you may be a riskier driver and more expensive to insure.

You filed a claim

Filing a claim for anything (an accident, vandalism, damage, or anything else) means that your insurer has to pay out more money, so they’ll likely adjust their rates in response.

Even filing a small claim could end up costing you more in the long run if your rate increases substantially. This is why some drivers choose to pay for minor repairs themselves instead of filing a claim with their insurer.

You added another driver or car to your policy

Adding another driver or vehicle to your policy can lead to higher premiums, as covering multiple vehicles and drivers is more expensive than covering just one car or person.

The more people driving your car, the more likely a violation or accident may occur, especially if the driver is a teenager or has a spotty driving record. Expensive cars also jack up your rates, as these cars are more likely to get stolen or cost more to repair.

Claims increased in your area or you moved

Where you live affects your car insurance costs. If there’s increased rates of theft, vandalism, or accidents in your Zip Code, you may face an insurance rate change, because it’s now riskier for insurers to cover drivers in your community. The same goes for if you move to a riskier area.

“Pricing can be based on many accidents that take place in your Zip Code, how severe the accidents are, or things like weather pattern changes,” says Seibold. “If many bars move into your neighborhood and there are drunk drivers running into parked cars on your street, that will affect your rates.”

We believe pricing someone based on where they live is discriminatory to low-income and marginalized groups. Instead of judging you based on your Zip Code, we look at the actual roads you drive on and where you park to determine your rate.  

Your credit score dropped

To most insurers, drivers with poor credit are a higher risk to cover. Studies show that a low credit score can raise your insurance premiums by 50-70% in some cases, depending on the insurance carrier and the state.

If you think this feels pretty unfair, you’re in good company. We think using credit scores to determine car insurance prices is discriminatory and disproportionally affects lower-income individuals and communities of color. It also has literally nothing to do with how you drive.

Because of this, LOOP is committed to never using your credit score to determine your car insurance rates.

How you can prepare for increased prices

While you can’t control the rate your insurer sets for coverage, there are some ways to deal with a price hike:

  • Speak to an agent to see if they can delay the increase until the next renewal
  • Adjust your coverage, including increasing your deductible
  • Make sure you know what renewal fees are charged on your policy before signing up
  • Shop around and compare quotes across different insurers
  • Review your insurer’s discount opportunities to see if you qualify
  • Drive safely. Keeping a good driving record (typically for three years) may lower your rates in the future

What you can do to lower your car insurance rates

If you've experienced a rate increase, there are steps you can take to try to lower your car insurance premiums. One option is to bundle your policies.

Many insurance companies offer discounts if you bundle multiple policies, such as home and auto insurance, with the same company. Another option is to take a defensive driving course. Some insurers offer discounts to drivers who complete an approved defensive driving course, which can show your insurer that you're committed to safe driving.

Don't forget to ask about discounts. Many insurers offer discounts for things like being a good student, having certain safety features on your car, or being a member of certain organizations. It's also worth considering raising your deductible.

If you're willing to pay a higher deductible in the event of a claim, you can lower your premiums. Keep in mind that this means you'll be responsible for a larger part of the costs if you do need to file a claim. Finally, review your coverage with your agent to see if there are any areas where you can reduce your coverage and lower your premiums.

Remember, it's always a good idea to shop around and compare rates from different insurers to find the best coverage at the best price.

If you enjoyed reading this post, check out our other blog posts about auto insurance.

About the Author: This article was crafted by the LOOP Marketing Team. Comprising of seasoned professionals with expertise in the insurance industry, our team is dedicated to providing readers with accurate, up-to-date, and valuable information. At LOOP, we're passionate about helping families navigate the world of car insurance, ensuring they get the best coverage at the most affordable rates. Learn more about our mission and values here.


For more insights on auto insurance and other related topics, visit our blog.

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You don’t need a good credit score to have great car insurance!

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