Why Did My Car Insurance Rate Change?
Insurance rates fluctuate. It’s a fact of life. However, we get that it can still be a bit frustrating to witness a price increase when you’re least expecting one. That’s why we’re here to help lift the veil and do our best to explain a few reasons why your rates may have changed.
Basically, the concept of insurance is built on shared risk. A rise in claims tends to affect all drivers. All insurance companies, including us at Elephant, use a number of factors to determine your auto policies and how much they have to cost. Many factors are based on events in your life—perhaps you recently purchased a new car, or you’ve added a new family member to your policy.
Unfortunately, however, some factors are beyond your limits of control. For example, a spike in drivers filing auto insurance claims in your area can lead to a jump in costs. Or, the sheer volume of drivers on the road—and inevitable increase in accidents and fatalities—can lead to an increase as well.
Let’s review a few more reasons:
Different types of cars cost different amounts of money to insure. There’s no way around it. Newer cars, for example, are loaded with the latest safety features to keep costs low. Older cars, on the other hand, are statistically more prone to mechanical failures. Plus, the more people you have on your policy, the more it will cost to keep everyone insured.
Seem obvious? Maybe. But it’s worth mentioning that no two cars—or drivers—are the same. (Yup. This is the time to talk about your teenage son who’s racked up a few speeding tickets.) Thinking of buying a new car? Let us know if you’re shopping around to see how that new model will affect your current rates. Similarly, give us a call if you’re adding a new driver to your policy.
Have you ever moved to a new home and noticed a change in your rate? That’s because insurance companies use zip codes to determine rates based on factors like accidents, theft, vandalism, and more. Even if you move to a new part of town just a few blocks away, if your mailing address has a different area code, you may notice a change.
It’s also important to note that policies also vary from state to state. According to this list, Michigan and Maine are the most and least expensive states, respectively. Why does insurance vary by state, you ask? Again, there are numerous factors at play. Each state has different minimum liability requirements, costs of living, and population densities. And because requirements differ for each, drivers are left with differing policy costs.
It may not always feel fair, but rates aren’t always centered on your individual choices. What’s going on around you—your location, the environment, the market—can impact your rate. You may have a perfect driving record, but there are still other drivers on the road. You may take extra precaution to stow away your car, but that doesn’t always stop break-ins. What do these scenarios indicate? That life happens. But that you also may live in a high-risk area. Unfortunately, higher risk means higher rates—and a subsequent change in your policy.
Certain natural environments are riskier than others as well, as certain areas are more prone to inclement weather or natural disasters. If you live in a location that experiences frequent tornadoes, hurricanes, or flooding, we have to anticipate a correlated chance of having to spend more money to cover damages to your car. This means (you guessed it) higher rates for you.
Vehicle technology is undoubtedly improving. Many cars now come standard with improved, state-of-the-art safety features, which is a net positive for drivers. Surprisingly, however, this improvement in technology can actually have a negative effect on your insurance rates.
While this may seem like an oxymoron, improved technology can actually lead to higher repair costs. While state-of-art technology certainly makes the driving experience safer and more reliable, the many computers, sensors, cameras, and other bells and whistles can be expensive to maintain and replace. And higher repair costs result in higher rates across the board for all drivers.
At Elephant, we know that life can change.
Sometimes, these transformations are out of your control. That’s why we do our best to make your rate as customized for your life as possible. There’s no one single factor to explain a change in everyone’s rate. The reasons are in flux—just like the world around us. But it’s our responsibility to monitor rate and market fluctuations and adjust our policies around your life.
At Elephant, we make sure we’re being as honest as possible with our pricing. Because our actuaries constantly monitor algorithms, we’re able to make changes as issues roll in. We identify situations where we’ve overpriced policies—and make modifications to provide you with fair rates.
Need help determining why your rate has changed? Want to know if an upcoming event in your life might affect your rate? Chat one of our agents to start the conversation.