You get your car insurance renewal notice and when you look at the figure it does not make you happy. If you were expecting to get a discount and a lower renewal quote, you feel disappointed with your insurer. When you see no reason why every year your insurance premiums should go up then your insurer may have their own logic.
Factors That Affect Car Insurance Renewal Rates
There are various reasons for an increase in your car insurance rates at renewal. Every insurance company has their own formula to calculate risk and each policyholder has a different profile. No two profiles are likely to be exactly similar and common factors influence renewal insurance rates as below.
Value of Car and Repair Costs
Each year there is an increase in the cost of new cars due to advanced features, fancy accessories, improved technology etc. Inflation also increases the cost of car parts and hence repairs to the car costs more every year.
Revision of Rates
The car insurance companies apply for increasing premium rates and file an application with the (FSCO) Financial Service Commission of Ontario. Some insurers may not get an approval to increase their rates. When the FSCO approves their application the rates go up and the policyholder could see the change in their renewal price. You may check out the FSCO website to know if your insurance company rates have increased or decreased. Overall, the quarter ending in March 2017 saw an overall increase in rates approved by FSCO by 1.24%. This increase is for the insurance companies on the FSCO list published and your insurer may have a rate revision for a much higher or lower amount. For example, Certas Direct Insurance Company saw an average rate increase of 7% approved by FSCO. This means that auto policyholders of Certas Insurance in Ontario may expect an increase in their premiums at renewal.
If you made a claim for a collision and the claims adjusters determined that you were at-fault, this could affect your renewal prices. When you are with an insurer who offers accident forgiveness for the first at-fault collision then you may be lucky. However, other insurers may increase your rates during renewal. It is a good idea to look for this feature when you apply for insurance.
Adding a New Driver
When your teen kid gets a driving license and you call your insurer to add them, they may increase your renewal rates. If you add another driver to your policy with a bad driving record this is another reason for an increase in renewal prices.
If you happen to live in an area where your neighbors have made too many claims then that could increase your risk too. Their claim may have nothing to do with your car but as per your insurer, the likelihood for you to file a claim is more.
Moving to a New Address
Your postal code is an important factor in determining your car insurance premiums. So, when you move to another address it could affect your premiums. If you move from a busy city to a safer remote area with less traffic that could benefit you and your premiums could reduce at renewal. However, if you move to an area with too many intersections, collisions, traffic congestion etc. then you could see an increase at renewal. More population and areas prone to car theft are on the radar for insurance companies. They calculate more risk for such areas and if you move there that would increase your premiums during renewal.
Bought a Better Car
The car you drive is a vital factor that influences your insurance premiums. When you change your car to a more expensive, luxury or high-performance car then your premiums could change too. At renewal, you may see a higher price.
This is another factor that could increase the car insurance premiums just like the cost of other goods and services. Inflation affects medical cost that rises each year for hospital expenses, rehabilitation and drug costs etc. Auto collisions may cause severe injuries or fatalities and hence insurers consider medical costs inflation. Legal costs also increase each year with inflation in lawyer fees, court fees, taxes etc.
Honest car insurance customers do fall prey to the fraudulent claims made by other criminals. Staging collisions and increasing claim amounts by falsification and crime does cost insurance companies billions of dollars each year. This is a reason for the increase in premium rates as insurance companies file for a rate revision. Once FSCO approves this application then all customers who have a policy with that insurer could see a higher premium at renewal.