But Why Is My Rate Increasing?



You’re a good driver, abiding by all of the rules of the road, and even taking extra caution to slow down at each yellow light despite the angry glares from those around you. The pace you drive is within reason and you double, even triple check street parking signs to avoid returning to the dreaded white envelope on your windshield containing a parking ticket. The question on your mind is probably this – Why is my insurance rate still increasing year after year? Your policy provides you with a “Superior Good Driver Discount,” but your driving history is not the only factor when it comes to increasing insurance premiums. Aside from how you drive, the insurance companies also rate based on other factors that operate below the surface.

Much like the varying price you’ll pay at the pump, or the fluctuating cost of produce at the grocery store, insurance premiums also change. Inflation is a factor, as the value of goods and services is expected to change over time. This can mean an increase as well as a decrease, depending on the state of the economy. Your zip code is another component, depending upon where you reside, the insurance for your car will be different if you move from a quaint house in the suburbs of Sherman Oaks to a lush mansion in Beverly Hills with a 90210 zip. Each time an insurance company is required to pay for a claim, whether it be a minor fender bender on the way home from work or a hit and run driver on the freeway, this increases the company’s loss ratio, which in turn can require the insurance company to take on a rate increase to balance this ratio.

Apart from the factors outside of your control, there are still ways for you to maintain a low rate on your insurance. Take into consideration the coverage that you are choosing – the higher the deductible amount you choose, meaning the cost out of pocket to fix your vehicle, the lower your premium will be. Consult with your agent on the amount of liability coverage you need if you are not sure what to select. There are many options that range from the California state minimum required limits to policies that provide coverage in the millions. Insurance companies also offer optional coverages from uninsured motorist to towing and rental. When you have a better understanding of what the numbers mean, you will be able to make a more informed decision on which policy to purchase. The car that you drive also makes an impact on pricing. Naturally, a brand new 2017 model Tesla will cost a lot more to insure than your trusty, hand-me-down 1998 Toyota. Driving experience comes into play, as well. If you are a first time driver, newly licensed at 16, the rates will definitely differ from those offered to a veteran of the road. Keeping these factors in mind, and making sure that you are driving as safely as possible (eyes on the road and not your phone), an affordable rate on your insurance is obtainable.

Kristen Nadel is a broker/agent at Fairfax Insurance Services.

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