Have you ever wondered why your auto insurance rates change? There could be various reasons that cause a change in your auto insurance rates: some of them are easier to understand and accept, and some are harder to understand and unacceptable reasons as a consumer. Here are a few of the reasons prices go up, or sometimes, down:
- If you have incurred moving violations and additional points in your record this will cause your rate to go up. Remember, that insurance rates is calculated based on risk, and if you are a higher risk, you will pay a higher rate. The opposite also is true, when you have less points, you will get a lower rate, and in fact, California has a massive discount, the California Good Driver Discount, that drivers with 1 point or less qualify for.
- Some companies offer what is called a "loyalty discount" - not all companies offer this discount, but a handful do. This discount is offered to customers who renew their policies with the same carrier. If you leave the company, you lose the discount, this is why it is sometimes NOT a good idea to be bouncing around from company to company.
- If a company experiences many losses (accidents/claims) it has to adjust its rates to stay profitable, and as a result, many customers see increases in their rates. From an individual customers perspective, this is unfair, because you have not done anything to cause these increases, and it is understandable why many customers do not accept this reason. However, from an insurance company perspective, it is very necessary to adjust rates accordingly to profitability, otherwise, a company will become insolvent. From a consumer point of view, the best way to counter this particular event is to simply shop around and place your insurance with another carrier.
However, despite the aforementioned, most policies keep the same rate as the previos term. Many customers wonder why a company doesn't lower the price & reward customers. The best way I can answer this question is by giving you this example: if you buy a pencil, and you need to buy a new one, the price stays relatively the same. You may or may not see a price different, but generally speaking, it stays the same.