Why do car insurance prices go up?

With any insurance company, there are various factors that can affect your price either at renewal or when you make a change. For example, car insurance rates may go up if you buy a newer car, are involved in accidents or due to broader economic influences. Read on for more information on factors that may affect your car insurance premium.

Insurance price changes based on things outside of your control

More claims

Essentially, insurance is a group of people sharing a pool of money, so if a covered loss happens to any of them, they’re covered. Due to the unpredictable nature of car accidents, repair costs and other events, sometimes you pay more into the pool than you get out. Other times you take out more than you’ve put in.

The way rates work is to help ensure the money is there when you do need it. Insurance companies may increase rates when trends show an increase in the claims that could be paid out versus what customers pay in.

It’s important to remember that with most insurers, in order to remain sustainable and provide you with a competitive, variable-rate opportunity, they may need to adjust rates as the cost of doing business has increased along with an increase in claims costs.

More fraud

It’s a sad reality that there are cases where fraud occurs. Fraud encompasses things like exaggerating the severity of damage on a vehicle or bodily injuries.

The result of this is paying out more claims than the insurance company has collected in premiums. This can lead to a price increase for everyone. In cases of fraud, a few bad apples could spoil the barrel.

More tech in your car

Vehicles that are new, shiny and loaded with smart technology are more expensive to repair—and therefore—insure. Examples of complex car components include features like:

• Back-up cameras

• Built-in navigation

• Distance sensors

• Electric motors

• Infotainment systems

Economic factors

Certain economic situations such as inflation, can affect insurance premiums. A rise in gas prices, labor costs, or the soaring cost of manufactured goods (even car parts!) can cause insurance premiums to change—which is why during economic changes it’s a good idea to refer back to your policy to ensure adequate coverage. While it might be tempting to remove or reduce your coverage to save money, you'll also want to consider whether the coverages you choose for your policy provide the protection you need in the event of an accident.  

Like many insurers, HiRoad uses a combination of factors to determine your car insurance rate. Some will be outside your control (see above) and some are in your control (read on).  

Insurance price changes based on things in your control

Your car

Lots of things can happen to affect car insurance rates based on vehicle-rating factors—and those take into consideration the type of car, truck or SUV you drive along with information like:

• Age

• Make

• Model

• Likelihood of theft

• Safety rating

Your coverage

The price of your auto insurance might change as you require more (or less) coverage.

If you have a one-driver policy and commute with an old beater car, you might skip full coverage (with collision). If you have relatives or friends in your household who also drive your car, you could add them to your policy. If you're trading in an older car for a newer financed vehicle and adding Comprehensive and Collision coverage to your policy, you should consider adding Rental Reimbursement coverage. In the event your car is in the shop for repairs from a covered claim and you really need a rental to get around, you would be able to rely on your previously added coverage.

Your address

Moving is a rate-change determiner too. Zip codes with instances of high vandalism or high frequency of accidents are greater risk factors for drivers. You might also move to a new neighborhood and see your rate decrease.

Your incidents

This is kind of a no-brainer, but at-fault accidents and traffic violations that occur will likely cause your car insurance rate to go up.

Companies have to account for this to make sure that, in “insurance speak”, they can accurately match your price to your probable risk based on past events. This could be anything from speeding tickets or a lapse in car insurance. Generally, your insurer will refer to consumer reports, including your prior insurance history and your Motor Vehicle Report (MVR) to assess your prior record as they determine your rate.

The good news about HiRoad and your smart driving habits

Demystifying that is part of the reason we’re reinventing insurance and trying to empower our customers to be in control of their price. We believe that HiRoaders are people who make thoughtful choices about their driving habits, their communities and the larger world. Our whole reason for being is to recognize and reward you for being the best driver you can be.

With HiRoad, the trends of your good driving habits affect your bill, so by nature, your monthly price is variable based on how you behave behind the wheel. And although your monthly bill will vary, you’ll never pay more than your max base rate.

We know a price increase isn’t something anyone wants to see, especially when you’re a good driver. It’s possible that your insurance rates may change over time, but with HiRoad you have the chance to drive down your price every month based on your smart driving choices.

Each day, week, month and trip, you have the opportunity to take positive actions such as driving at safe speeds, braking more smoothly and taking corners with more care. And that good driving behavior results in a monthly discount on your insurance bill.