Even if you are a faithful customer and a good driver, you will experience times when your insurance rates increase. Even though you have to drive with insurance, you will probably wonder why on Earth you've been "penalized". In reality, rising rates are not a punishment. Rates always go up for a reason, including the following:
1. You've gotten a new car.
If you've traded you old car for a worthier set of wheels, you insurance will also reflect the new value of your ride. Newer cars are more expensive to replace in the case of an accident. Your insurance will also go up if you new car:
2. You've graduated to a higher risk demographic.
Statistics govern every rate offered by an insurance company. For example, single, young men seem to be more likely to get into car accidents. If you were a married man, and then got a divorce, you would move into the single demographic once again, which may increase your rates. Other higher risk driver groups include:
3. Mother Nature is not being kind.
One of the reasons people are seeing rising rates in the United States is because natural disasters just keep on coming. These disasters affect cars; floods, falling trees during tornadoes or hurricanes, hail, and fire all cause damage that your insurance should cover. Instances of disasters seem to be on the rise, and your rates are rising with them, in order to make sure the insurance company has the funds needed for your coverage. Natural disasters also increase:
4. Investing is not what it used to be.
Just like a bank, your insurance company uses your payment to fund investments so that your money can grow in order for them to be able to afford to pay out thousands and millions to customers each year. However, in the past few years (since the recession in 2008), stock market investment returns have not been growing in ways that most businesses would prefer. The money to fund insurance claims must come from somewhere, and when it can't come from investments, it has to come from customers.
Your insurance company does, however, have you best interest at heart, if not for your purposes, then for their own. After all, insurance is incredibly competitive. The only way companies can offer lower rates and benefits is if investment profits are high. Therefore, your insurance company is still working behind the scenes to try and get the best return on your premiums; it's the best way to keep and attract business.
Insurance is the best way to keep your and your vehicle safe on the road. Dealing with rising rates can sometimes be prevented by careful driving and vehicle selection. However, there are some changes in cost that you can't prevent. Talk to an auto insurance agent at a trustworthy company to ask for the research behind your rates. In light of the changes economy and climate, they are probably understandable.