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Why Did My Car Insurance Go Up?

You’ve received your renewal notice in the mail and you're taken aback by the increase in your premiums despite no changes to your policy or filed claims. This prompts the question, "Why is my car insurance so high?" You’re not alone in questioning the increase in rates. In fact, the average cost of car insurance has risen more than 20% since 2023.

Your premium is determined by a mix of factors, some under your control and others not. Understanding the factors that influence car insurance rates can help you reduce your costs and manage your coverage effectively.1

Common reasons for auto insurance rate increases

Increased accident rates and claims

Your driving record and location are typically the most significant factors influencing car insurance rates. Understanding how your location or how a car accident affects your insurance rate can help you manage and possibly reduce your insurance costs.

  • Violations: There are over 270 million cars on the road in the U.S.,2 making traffic violations a common occurrence. With speeding being one of the most frequent violations, it’s important to understand how speeding tickets impact insurance rates. Typically, receiving a ticket leads to an increase in your auto insurance premium. Other traffic violations, such as illegal lane changes or reckless driving can also raise rates. The severity and type of violation determine the extent of the increase.

    Maintaining a clean driving record often leads to lower auto insurance premiums. Insurance carriers assess recent accidents and moving violations to determine rates. Safe driving not only helps keep premiums low but also enhances road safety for everyone.
  • At-fault accidents: At-fault accidents will usually result in an increase in your premium. Like violations, insurance companies see at-fault accidents as indicators of risky driving behavior. The impact of at-fault accidents on your premiums can last several years, depending on the insurer's policies.
  • Not-at-fault accidents: While not as severe as at-fault accidents, not-at-fault accidents can still lead to premium increases. The impact is usually shorter than at-fault accidents but can still affect premiums.
  • Location: Living in areas with high loss frequency may lead to higher premiums. Insurance carriers may adjust their rates to offset the increased risk of claims.

Higher repair and medical costs

Labor shortages and inflation have led to increased auto repair and medical costs across the industry, explaining why is car insurance so expensive and leading to increased insurance premiums.

  • Auto repair: The number of workers graduating from skilled auto technician programs has dropped 20% since 2020.3 This shortage of skilled mechanics and technicians has driven up labor costs in auto repair shops. With fewer workers available, repair times can be longer, and shops may charge more for their services.

    Price inflation has increased more than 19% in the last four years, and the auto manufacturing and repair industries have not escaped its effects. With an 11% increase in the past year alone,4 the cost of repairing vehicles has significantly risen due to inflation. Included in this are the delays and shortages in obtaining car parts that have made repairs more expensive.
  • Medical costs: The health care industry also faces a shortage of medical professionals, resulting in higher wages and increased medical expenses. These elevated costs along with those linked to car accidents can contribute to the overall expense of car insurance.

New car models and associated risks

We benefit from the enhanced features found in newer cars, but these same features can increase the cost of insurance premiums. If these features are damaged in an accident, they can be costly to repair.

  • Increased repair costs: Newer vehicles often come equipped with advanced safety features such as sensors, cameras and automated systems. If you’re rear-ended, even minor physical damage to the bumper can result in expensive repairs due to the embedded sensors and technology.
  • Higher risk of theft: Newer model cars may be at a high risk of theft due to their high resale value and advanced technology. Additionally, specific parts such as catalytic converters, navigation systems and other electronics could potentially lead to break-ins due to their desirability.

Natural disasters and weather-related incidents

More frequent and severe natural disasters, such as wildfires, hurricanes and hailstorms, have led to significant losses nationwide. The rising frequency of such disasters can result in higher insurance premiums, particularly in areas most susceptible to these risks.

  • Insurer payouts: Insurance companies face increased payouts for vehicle repairs and replacements due to natural disasters, leading to higher overall claims costs.
  • High-risk areas: Regions prone to specific types of natural disasters may experience premium increases due to their heightened risk.

Tips for reducing auto insurance premiums

There are several strategies you can explore to lower your car insurance costs without compromising on your coverage. Here are some tips on saving money on car insurance premiums:

  • Bundling your policies, reviewing available discounts and increasing your deductible can be effective ways to lower your overall insurance costs:
    • You can save up to 30% when you bundle auto and home insurance.5 Don’t own a home? At Amica, you can bundle most of the policies we offer.
    • Amica offers car insurance discounts for young driver training, defensive driver training and more.
    • Changing your deductible can also help mitigate the cost of car insurance. Generally, choosing a higher deductible will lower your policy premium. However, you’ll want to ensure you pick a deductible you can afford in the event of a loss.
  • Car safety features and anti-theft devices can potentially reduce the risk a break-in or severe car accident. Safety features, like alarms, steering wheel locks and GPS tracking systems, boost vehicle security and demonstrate a commitment to safety. Carriers often reward such precautions with lower insurance premiums.
  • Consider exploring usage-based insurance options to help you reduce your auto insurance premiums. Usage-based insurance adjusts premiums based on your driving behavior. Utilizing telematics technology, it monitors various aspects of driving.

    At Amica, policyholders can access the StreetSmart by Amica™ mobile app. By practicing safe and smart driving habits, you can potentially save up to 20% on your policy premiums.5

Next steps for managing your auto insurance policy

Fluctuations in your premium at renewal are normal. However, it's essential to carefully review your policy details each time to ensure your coverage fits your needs and budget. For example, you may consider removing physical damage coverage for an older vehicle if you anticipate paying more for insurance than you would receive from a claim. Understanding why did my car insurance go up can help you make informed decisions about your coverage.

We’re always happy to discuss your policy, coverage options and discounts with you to make sure you’re getting the best price and protection. 

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1 What’s behind the rapid increase in car insurance rates.
2 There’s an Auto Technician Shortage. Expect Higher Car Repair Costs.
3 The Current Inflation Rate is 3.4%. Here’s Why It Matters.
4 Car Insurance, Repair Cost Increases Far Outpace Overall Rate.
5 Discounts may vary and are not available in all states.
6 Car Ownership Statistics 2024.
 

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