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  • Writer's pictureCharlotte Burr

Why is my auto policy going up in price?

Updated: Aug 1, 2020

Your auto policy premium is renewing higher this year than what you thought it would be, yet you have no accidents or tickets on your record. What is going on?

Sometimes insurance sucks… until you need it.

To be honest, your actions as a driver are only a part of the equation that determines your policy premiums. Did you know that your credit history and even your zip code play a role in insurance rates?

Here are some other things to consider when you ask yourself, “Why did my premium go up?”

1. Increase in new vehicles on road

The number of new vehicles on the road has gone up. Newer vehicles have complex computer systems, multiple airbags, back up sensors and cameras. So, a common fender-bender can now cost 3 times as much to repair compared to only 10 years ago.

2. More people driving

Due to low gas prices and higher employment rates, more people are choosing to drive. 2016 saw the highest increase of drivers in 25 years. Driven mileage is also up by 3.5% for each driver.

3. More accidents Accidents are increasing. Due to distracted driving, all accidents are on the rise. In fact, 80% of drivers admit to “risky behaviors” like texting, making calls, playing with GPS and the radio, or even surfing the web while on the road. Up to 15% of drivers are considered “impaired” by alcohol or drugs (legal and illegal) during the daytime and that percentage doubles at night. Deaths involving vehicles hit an all time high in 2017, worse than 1966 when we didn't even have seat belts.

4. Medical inflation

Medical inflation and increased claim complexity plays a big role. Even someone who only deals with having a sore neck for a few days after a small collision is encouraged to seek specialized medical treatment and file a claim for compensation. Look at all the TV advertisements and billboards that encourage drivers to “seek compensation” for every little ache and pain. All those attorney’s fees add up to BIG costs for everyone.

“Well” you say, “I don’t drive a new car, and I don’t engage in risky behavior so why do I have to pay more?” That’s a valid point.

Here's a scenario- You drive a 1997 Toyota Corolla because it's inexpensive to own, inexpensive to drive and inexpensive to fix. But your Toyota is also capable of totaling a 2017 Mercedes. That would be an expensive bill no matter who's at fault. The fact that a luxury car could be totaled by your inexpensive Toyota is why insurance companies have to take ALL cars and ALL drivers into consideration when they set their rates. As long as your car drives the same roads as that Mercedes, you and the “other guy” will both be a part of the same rate equation.

How to keep your rates down
  • Compare insurance quotes every year and after major life changes such as moving or getting married.

  • If you drive less than 10,000 miles per year, consider a usage-based or per-mile insurance policy.

  • Take steps to improve your credit, which may affect car insurance rates in some states.

  • Ask your agent to do a periodic review for possible discounts.

  • Consider buying your auto and home insurance from the same company for a bundling discount.

Final takeaways:

If there’s one thing you can take away from this: Keeping your auto insurance current and at the right level for your needs will ensure that you will have a safety net if and when you need it. Accident survivors will tell you that having auto insurance coverage when they needed it the most was literally a lifesaver. It’s peace of mind that you can’t put a dollar amount on.

AZ Insurance Team 480-535-5709

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