Why does my car insurance rate keep going up? It should be going down!

How many of you think your rate should keep decreasing?

Probably many of you.

Why shouldn’t you?  When you turned 25 your rates decreased.  When you got married your rates decreased.  When you bought a home and combined your home and auto insurance your rates went down.  You haven’t been in any accidents, and haven’t gotten any tickets, right?

But lately, they just keep going up.  At every renewal it seems.

There is no rule that says your rates should go down just because you’re getting older.  Truth be told, after you reach a “certain age”, your rates can systematically increase at each annual renewal.

The facts are, insurance carriers are not municipalities, they aren’t non-for-profits, they are businesses.  Actually, they are MEGA businesses, worth BILLIONS.  Just like any other business, they need to stay profitable to survive.

You can mostly thank insurance fraud and natural disasters for your continuously increasing rates.

You see all of those out of state license plates driving around in your area?  Do you think all of those people are really here visiting?  When someone registers and insures a vehicle in a state where they don’t live in order to get a lower rate, they are committing insurance fraud.  It’s called rate jumping.

That person that was in a minor accident, then they remember that “injury attorney” commercial and decide they would fake an injury to get paid.  That’s a more obvious insurance fraud.

Why does any of this matter to you?

Well, insurance rates are what they are for a reason.

When someone insures out of state to get an artificially reduced rate, they aren’t paying into the same pool of money that you are at the proper rate.

When someone fakes an injury, and keeps going to the chiropractor complaining about injuries they don’t have, they are sucking money out of the insurance company that is there to pay valid claims.  This happens, A LOT.  In fact, several carriers in New York started Special Investigation Units to investigate a lot of these medical claims from car accidents.  They uncovered a mafia ring based in Brooklyn that was setting up staged accidents, and using corrupt doctors to milk the insurance carriers out of millions of dollars.

Then there’s the natural disasters.

Hurricane Katrina alone almost bankrupted a LARGE national insurance carrier.

Add into that, storm after storm in Florida, wildfires in California, tornadoes in the mid-west… it adds up.

The insurance companies base your rates on several factors, the area of the country you’re living in is heavily weighted, all the way down to your zip code.  Do you live near a coast that may be threatened by storms?  Are you near large forested areas that have potential for wildfires?  Do you live in Brooklyn, NY where accident insurance fraud runs rampant?  The rates they establish are to help keep them profitable so they can continue to operate, and pay out valid claims when their policyholders need it.

Finally, there’s the plain ole cost of doing business, which increases every year.

Does your electric bill go down every year?  Your cable or phone bill?  Your fuel costs?  Nope.

Unless your insurance carrier files a rate decrease, which has been rare the past few years, your rate at-best will remain level… but most likely it’s going to increase.

What can you do about it?  If you are with a captive insurance agent that only works with one company, you can go out on your own and shop shop shop for a better rate.  Or, you can contact an independent agent (like myself, hint hint) that works with multiple carriers, and can do the shopping for you.  If you do decide to go it alone, make sure your are getting quotes for the same or better coverage.  Remember, it’s not just about rate, it’s about having the proper coverage at a competitive rate.  People don’t choose to insure with Chubb for their rates, they do it because their coverage and services are incredible.

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Here is an interesting article on the topic, if you feel like reading further on the subject.

https://www.valuepenguin.com/2017/05/auto-insurance-rate-hikes-also-likely-2018