Has Your Car Insurance Gone Up? Learn Why From Everyday Loans.

Why Does Car Insurance Go Up?

If you have ever insured a car, you have likely wondered, why does car insurance go up? If you just got your car insurance quote through and the price is higher than you expected, there are some reasons that could explain the change. Before we get into specifics, it is important to remember that every car insurance company has their own formula for calculating what they charge. This may or may not include the factors we mention below.

The first and most obvious factor that could affect your insurance cost is an accident. If you got into a car accident, this could make your rates go up. Even if the accident was not your fault some insurance agencies will raise your prices because you are seen as being at higher risk.

The next factor is a driving conviction. If you were caught speeding or breaking some other roadway ordinances the insurance company might see you as more likely to claim in the future. The more serious the offence, the more likely it will affect your insurance rates.

Other criminal convictions can also affect rates. Essentially, if you have broken the law, an insurer could see this as a sign you are at a higher risk of claiming on your insurance.

Another factor is insurance premium tax. This is something most people do not think of when they are buying car insurance. This is a tax levied by the UK government on all insurance policies. If the tax goes up, insurance rates may increase as well.

Serious injury compensation is yet another external factor that can affect your insurance rates. This is a calculation that estimates how much money will be paid out if someone is involved in a serious accident. If this estimate goes up, insurance prices are also more likely to increase.

Where you live can also come into play when insurers are generating a quote. They may use crime statistics as well as accident information or other metrics to decide how much it will cost to insure your car. This means people in high crime areas or people who drive in places where accidents are more likely may pay more.

Your job can also factor into the price of your car insurance. Remember that insurance companies have access to information on millions of people. That means they have the data to tell them whether, for example, an actor is statistically a safer driver than a builder.

Car modifications can play a big role in your insurance rates with some insurers. Modifications made to a car could make it more likely to be stolen, change the value of the car or, in the case of modifications to the power of the car, may make it more likely to be involved in an accident. Even changing the colour of your car could alter the insurance costs.

The final common factor that affects insurance rates is the value of your car. If your car is new, rare or just expensive, that could make it more costly to insure. This is because, if your car is written off, the insurance company will have to pay to replace it. That means they are taking on a larger potential bill if they agree to insure you.

These factors help explain why car insurance goes up but they are not the only explanations. Remember that every insurer has its own formula that they use to calculate the cost of car insurance. However, by taking the above information into account you may be able to save some money on your car insurance.