I have not had any accidents or violations, so why do my auto insurance premiums continue to increase?
An insurer's premium increases are a direct reflection of the countrywide or statewide pool of losses that the insurer experiences. The losses of the few within the insurer's pool of policyholders are paid for by all policyholders within the pool. This is the basic premise upon which the concept of insurance is based and without which no insurance would be available. This does not mean that your own favorable loss experience cannot be recognized. Various insurers give numerous discounts to policyholders which recognize their excellent driving records (see next question for types of discounts). Other reasons for the increase in the cost of auto insurance are attributable to the costs to settle losses such as the costs to repair vehicles and the medical costs for injured persons which continue to rise. The increase in lawsuits is also a major factor in insurer rate increases.
Is there any way that I can reduce my premiums?
Take advantage of the discounts offered by your insurer. Most insurers provide discounts for at least some of the following:
- Accident-free driver discount
- Package discount for insuring your home and auto with the same insurer
- Multiple vehicle discount
- Good student discount
- Nonsmoker discount
- Passive restraint discount (for vehicles with air bags or automatic seat belts)
You can also reduce premiums by choosing to have higher deductibles for your comprehensive and collision coverages, but that means you may need to pay more if you are in a crash.