As far as you’re concerned, you’ve done everything right. You pay your car insurance bill on time, you’ve got a clean driving record, you haven’t been in any accidents or gotten any speeding tickets, and you haven’t filed in any claims recently.
But then you see that your car insurance went up for no reason. So what happened?
It’s common to see a premium hike after an accident where you’re at fault. You’ll even see it go up for not-at-fault accidents, too.
Premium increases take into account the kind of risk you have as a driver. But there are also other factors that determine your premium.
Let’s dig in and look at some of the potential reasons behind why your Farmers insurance rate increased for you and other auto customers.
Everyone is going through this
This might soften the blow of a higher car insurance bill—you’re not alone in this. It’s not just you noticing your Farmers rates increasing.
It’s not even an issue specific to Farmers. Car insurance rates are going up for everyone. It’s happening across the board regardless of which insurance company you have.
The increase isn’t small either. Between 2006 and 2016, car insurance rates rose more than 50 percent. You can expect it to continue to rise, too.
Wait, auto insurance rates are actually going up for everyone?
The short answer is yes. Why is it happening to everyone? Insurance companies are businesses and so they want to turn a profit. To compensate for losses and rising costs, insurers raise rates for their customers.
What kind of costs do insurance companies have to cover? It comes down to claims, claims, and more claims.
Every year, insurers pay out billions of dollars in claims. Insurers have to raise rates to offset these huge losses. And this applies to all customers. So things like your driving record aren’t taken into account for this.
Ok, so why did my Farmers insurance rate increase?
Since insurance is complicated, there’s no one reason you can point to that explains why your car insurance is so high now. With auto insurance, rate increases are often determined by the things that you don’t have any control over.
But let’s take a look at just a few of the factors that could be contributing to those premium hikes you’re seeing:
People are filing claims, and a lot of them too
The number of drivers who are filing auto insurance claims has risen significantly over the past couple years.
The Insurance Information Institute discovered that the claims frequency rose to 2.6 percent between 2014 and 2016. This was just for collision claims, but other coverage claims also saw an increase within that period.
Not only are the number of claims increasing, but the severity of them are rising too. Collision claim severity rose 8.2 percent.
There are just more cars on the road
People love to buy cars and it’s showing. The number of cars being sold each year has steadily increased. In the U.S. in 2018 alone, 5.3 million passenger cars were sold.
Not only that, the number of miles people are driving has risen too. There are a number of reasons why this number has increased, but one of the main factors is economic growth.
With more people employed, there’s a great number of people commuting to and from work. Not only that, with more income people are driving to spend their money and meet friends and family at restaurants, movie theatres, etc.
Cars are increasing accidents and fatalities
The more cars on the road and the more time you spend driving increases the risk of getting into an accident.
In 2018, around 40,000 people lost their lives in car crashes. And around 4.5 million people in 2018 were seriously injured in crashes.
While these numbers are lower than the previous years, some states saw an uptick in fatalities. Florida, Hawaii, Minnesota, and New Hampshire are just a handful of states that saw a 5.8 percent spike in fatalities.
People are driving distracted
Your first instinct might be to check your phone while driving if you hear it buzz or see the screen light up. But you have to resist this urge. Don’t text, don’t check your notifications, and listen to the GPS instructions rather than looking at it on your phone.
Driving distracted leads to accidents, and severe ones too. In 2017 3,116 drivers were killed in driving distracted accidents.
With distracted driving, drivers get taken by surprise. They often collide without braking, and the result is more injuries that could be much more severe.
The rising cost of, well, pretty much everything
With the increase in severe injuries, the rising cost of medical care and auto claims make everything much more expensive. All this leads to increased premiums so insurance companies can cover these losses.
But not only that, the cars themselves and the cost to repair them have increased over the last decade.
New cars have state-of-the-art technology that make it expensive to repair or replace. This technology includes sensors, back-up cameras, and other high-tech gadgets.
These factors all have an influence on why you’ve seen your Farmers insurance rate increase.
Is there anything based on my own profile as a driver?
So you can’t control other people’s driving habits and you’re not responsible for the rising cost of repair and replacement of cars. What are you responsible for? And what can you change?
Let’s take a look at some personal factors that contribute to why your premiums have gone up.
Speaking of driving habits, how are yours? Your driving record has a huge impact on your premiums. If your driving record is free of accidents, moving violations, and points, insurance companies will reward you with lower quotes and premiums, as well as a discount.
Keep a clean driving record by practicing safe driving techniques. You could be eligible for the good driver discount.
If you’ve shown in the past that you have a tendency of getting into accidents or racking up traffic infractions, you’re more likely to have similar issues like this in the future. So insurance companies charge you an increased rate to offset the probability they will have to pay out claims.
The good news? Even if you get a ticket or if you get into an accident, it won’t last forever on your driving record. They will stay on there from anywhere between 3 to 10 years, but they will drop off eventually.
Did you reach out to Farmers to make any changes to your coverage? If you have, you will see a premium spike especially if you increased your coverage.
But you can always reevaluate your coverages. It’s good to be protected in the event of an accident, but you never want to be paying for coverage you don’t need.
And on the note of coverage, always make sure you avoid a lapse in coverage. Even a short period of time without insurance is engaging in risky behaviour according to insurers.
Also, you’ll experience a premium spike the next time you get a policy. Sometimes, a lapse in coverage can raise your premium by 12 percent.
Life changes can be good, but they can also affect your insurance.
Did you move and suddenly see your premium go up? Even moving a couple blocks can sometimes increase your rates by more than 60 percent.
Also, if you just bought a house, bundling your home and auto insurance can get you a discount at Farmers.
Changed cars recently? If you did, this could’ve increased what you’re paying in monthly premiums.
Different makes and models come with various repair costs. If your car comes with high-tech features that are costly to repair, you’re likely to see a premium bump.
What can I do to offset my Farmers insurance rate increase?
There are small changes you can make that can lower your premiums at Farmers.
Increasing your deductible is a common tactic people use. But don’t be so quick to call your insurance agent to make this change. Before you do it, make sure you have the funds to pay this amount if you were to get into an accident and file a claim.
Another thing you can consider is to opt for liability rather than full coverage for your policy. But only if it makes sense for you.
If these small changes aren’t making a big enough difference for you, then you should take some time to shop around. Get multiple quotes from different insurance companies and compare them to what you’re paying for now.
If you could be getting a better deal somewhere else, it might be time to switch car insurance companies. And if you’re seriously considering it, here is our guide on how to cancel Farmers insurance.
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