Why Are My Auto Insurance Rates Increasing?

Photo of a blue car driving on a country road -- Auto Insurance Rates Mason McBride inc Michigan

This is hands-down the most common question we get at Mason-McBride. We understand how frustrating rising auto insurance rates are — we have to pay the premiums too! Even good drivers are victims of getting their annual premiums raised.

There are several reasons why your car insurance company is raising your rate but the most common are accident claims, credit score, and medical costs.

Accident claims and tickets

Claims and tickets are an obvious reason as to why your rates are increasing. If you’re involved in an accident or get a speeding ticket, your insurance company will raise your rates- period. That’s why it’s so common for people to pay for minor accidents out-of-pocket.

Industry secret: more often than not, paying for a minor accident yourself ends up being much cheaper than filing a claim. After one accident, it is common for rates to increase as little as 10% to as high as 40%, depending on your carrier.

As traffic continues to pollute the roads and distracted driving accidents increase, the rate of claims are increasing also. Insurance companies study the traffic patterns in your area and adjust annual premiums according to the level of risk present.

Credit score

This is one of the main factors that influence your auto insurance rates. If your credit score recently went down over the past year, there is a good chance your auto insurance rates will increase.

Technically, insurance companies can’t legally base rates off of your credit score. It is referred to as an “insurance score”. It works as a type of discount system, so if your credit score is higher, you can/will receive a multi-line or loyalty discount off of that premium. However, if your credit score is low, you will pay the high premium in full.

This is a controversial factor because credit score, clearly, does not directly influence driving habits. However, there is one way to improve your high premium situation- raise your credit score.

Rising medical costs

People are driving more than ever before, which inevitably increases the rate of accidents. The cost of claims are also rising and the reason is the soaring rate of medical costs.

To put it in perspective, in 1960 health care cost for one person was about $146 per year. In 2017, the annual healthcare cost per person was $10,739. That’s an increase of over 7,000%! Since car insurance policies cover both the driver and passengers with liability and car collision coverage, it makes economic sense that rates are increasing. If the insurance company has to pay for more claims, the price of premiums has to increase.

In Michigan we are a “No-Fault” state, so Personal Injury Protection, PIP, is integrated into that law. PIP is meant to cover a driver’s medical bills in a car accident and is not dependent on who is at fault for the accident (hence the no-fault part).

There is no fee schedule with PIP so there are many services eligible for a claim including medical, medication, surgical, hospital expenses, rehab, and ambulance expenses. If you are disabled in an accident, PIP will pay for 85% of lost wages up to 3 years. PIP also covers funeral expense/death benefits and attorney fees.

Car insurance can be just as expensive for you as it is the actual carrier, in some cases.

How can you lower your premium?

The best way to lower your premium is to be a safe driver. Pay attention to traffic laws, put your phone on silent in your glovebox, and keep distractions to a minimum.

Working with an independent insurance agency like Mason-McBride can also lower your premium. How? As an independent agency, we aren’t tied down to do business with only one insurance carrier. We find you the perfect combination of price and coverage that fits your unique needs.

Contact us today and we will lay out all of your options to ensure that you receive the best coverage possible!

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