Auto Insurance – Reasons Premiums Increase

Auto insurance premiums can increase for multiple reasons; upon issuance of the policy (within the first month after purchase), midterm and upon renewal.

If a policy premium increases upon issuance, it could be for multiple reasons:

• Undisclosed Violations – If your agent did not pull your driving record when you purchased the policy, your driving record could be verified later and could cause an up-rate (increase in premium) if there are any undisclosed violations which were not accounted for.
• Proof of Marriage – Some insurance companies will give marriage discounts if an insured is married. Although a discount is given immediately, an auto insurance company can request a proof of marriage such as a marriage certificate. If the proof is not submitted within the time permitted, you will be issued the “single” rate resulting in a premium increase.
• Proof of Address – Sometimes auto insurance companies want to make sure you don’t reside in a high traffic area and are using a different address to lower your rates. In such circumstances, proof of address may be requested. Examples of proof are utility bills showing the insured name and address. Failure to provide proof of address may result in your premium being increased.
• Driving Experience – Often, a policy can be rated with inaccurate driving experience which can lead to corrections once the policy is issued. This can cause an adjustment in premium.
• Accident History – Most insurance agents do not have access to accident reporting called “CLUE” which is accessible by most insurance companies. If a driving record was pulled and shows no accidents, the CLUE report can later reveal an undisclosed accident causing an up-rate.
• Vehicle Description – A policy is rated based on the exact vehicle model. Since same vehicle models often have higher or lower sub-models, selecting the correct vehicle is important to ensure a rate does not increase once the vehicle model is matched using the VIN number.
• Coverage Exclusions – Some insurance companies will require that you sign an exclusion agreement when declining certain coverage such as Uninsured Motorist coverage. If the insurance company does not receive the signed document declining coverage, the coverage can be added to the policy increasing your coverage.
• Driver Exclusions – Insurance companies require that all household members of an insured be listed on the application as insured or excluded. If the company does not receive a request to exclude or include, they may automatically include household members to the policy causing an increase in premium. This may also lead to policy cancellations.
• Vehicle Use – If a company suspects work related use of a vehicle, they may cancel your policy or choose to increase your premium by adding a business use rate. The annual mileage added to a vehicle can also be a factor when rating a policy which can lead to premium increases if improperly rated.

If a policy increases midterm, it could be for the following reasons:

• Moved to Another City – Since auto insurance rates are based on zip code, if you move to a different zip code generating a higher rate, your policy premium can be increased.
• Endorsements- If you add a vehicle, driver, or change coverage or vehicle use, your policy can increase or decrease.
• Late fees- If you make your premium installments late, your policy can incur late fees which will generate higher billing amounts.

If a policy increases upon renewal, it could be for the following reasons:

• Revised Rates – Auto insurance companies can have a general rate increase for multiple reasons. This can affect your policy premium which cannot be avoided if it happens to occur.
• New Violations or Accidents – Every time your policy renews, your driving record is reviewed for new violations or accidents. If your driving record does change, it can also affect your rates.
• Renewal Fees- Companies may have renewal fees charged every new term. This is not a rate increase; however, your bill may be higher if it includes a renewal fee, usually a policy fee.

Some of these mentioned situations cannot be avoided; however, by choosing a good auto insurance agent, you can ensure accurate auto insurance quotes. A good insurance agent should also be able to assist you with any rate increase if there is anything that can be done to correct it.

Source http://www.OnlineAutoInsurance.com