By Madeline Klein on July 25, 2017.
It's probably one of drivers' biggest sources of frustration when it comes to auto insurance: perfect driving record and rate unexpectedly goes up. Now, we can't speak for every insurance company, but we're going to ballpark and say 99 percent of the time, there is a reason for the rate increase and it's not so some greedy company can pocket more profit.
That being said, here are the most common reasons a rate increases for a driver with a clean driving record:
Where You Live
Your address plays into your insurance rate for a lot of reasons. It shows the insurer how congested the traffic is near you, how much vandalism and theft occurs in your neighborhood, what the typical weather is and more. All of these variables help determine how likely you are to have a claim, so when one or more change, your rate may change to reflect the difference. Consider an influx of residents adding to the daily commute, an increased risk of flooding in your area, or a spike in car break-ins.
What You Drive
Sometimes certain vehicles are more alluring to thieves and vandals than others. If your car ends up on a most-targeted list, you may see your rates increase. A lot of insurers offer anti-theft device discounts, so make sure your vehicle is equipped with one, like a car alarm, disabling device or GPS tracker. The discount may help offset a rate increase.
Your Credit and/or Insurance Score
Even if you have a perfect driving record, if your finances, credit history or payment history takes a hit, you may see a rate increase. Both credit and insurance scores are based on financial factors that predict the likelihood you'll have a claim. If for some reason your score drops, you'll signal a higher claims risk and your insurance company may adjust your rate accordingly.
If an insurance company sees a consistent increase in the amount they're paying out for claims, they may need to adjust their rating plan to make sure they can keep up with the trend. It can be a specific type of claim and coverage, or an increase across the board. For instance, if the company paid a large amount of collision claims, you may see your collision coverage increase while the others stay the same. If claims were up for multiple coverage types, the company may decide to increase the cost of every coverage option.
Overall Change of Rating Plan
Sometimes insurance companies switch up their rating plans to include, remove or weight factors differently. It may be as simple as increasing each factor's cost to make up for higher-than-expected losses, or it can be a shift in focus. For instance, if a new statistic showed pet owners were safer drivers, then an insurance company may start to factor in that variable and weight it heavier than some of the other indicators of safe driving habits. In that case, those with pets would benefit, while those without may see their rate change.
It Was a Mistake
If none of the above reasons make sense for why your rate increased, it may have been a mistake worth looking into. Call your insurance company to double check all of your information is correct.