Four Unexpected Reasons Why Your Premium Could Climb
A motorist has shopped around, explored all options, and purchased the right Vehicle insurance policy at a reasonable price. But over the years, premiums begin to climb for no apparent reason. Here are a few developments aside from getting tickets or accidents that might unexpectedly boost premiums:
Your Kid Reaches Driving Age: Insurance companies are always on the lookout for potential reasons why policyholders would file a claim. And for a coverage provider, there’s no greater threat than a teenager learning to drive. Accident statistics for younger motorists are notoriously bad. Despite advancements in technology and safer vehicles, vehicle accidents remain the leading cause of death for teens 19 and under. As a result, the moment an insured driver’s child hits legal driving age, their rates may go up.
Your Credit Heads South: Credit score represents a person’s ability to honor a debt, but to some insurers, it also represents accident potential. Some companies say claims data show there is a correlation between the number of insurance claims that drivers file and their financial background. This has lead to a process called credit scoring, which is considered controversial by many drivers. Although fairly common, states like Ohio have placed limitations on how financial information can be used when underwriting drivers.
You Buy a Nicer Car: A motorist works hard and saves his dollars to buy his dream car, only to find out insurance rates have skyrocketed. The truth is the vehicle that a person insures plays a major role in how much someone pays for protection. An expensive sports car, designed to look great and go fast, is likely more expensive to repair or replace than a humble sedan, and most likely a lot less safe. For insurers, this means a bigger loss if the insured driver is involved in an accident. To compensate for the additional risk, premiums are increased.
Your Insurer Takes a Hit: When someone’s coverage provider suffers heavy financial loss, the expense is usually passed on to policyholders in the form of higher prices. A high number of claims, lawsuits, or just bad investments can all mean lower revenue. Also, a company that is deep in debt is unlikely to offer cheap insurance rates to new customers. Before buying a policy, people are encouraged to investigate an insurer’s credit and investment history, and avoid purchasing a plan from a company on the verge of bankruptcy. Taking the time to do a little research could end up paying off in the long run.