Sometimes, you can earn rewards for being loyal to one company. You might be eligible for a free cell phone upgrade, you could get a discount for faster internet, or you get early access to sales and better deals for things.
You might expect the same to happen for your insurance company. You’ve been a loyal customer, you haven’t been in any accidents, and you haven’t filed any claims. At the very least, your premium should stay the same.
So why did your car insurance go up for no reason? It’s impossible to pinpoint a single reason for a rate raise. It’s a mix of things that are out of every drivers control and personal factors that relate to your own profile as a driver.
Let’s take a look at some of these reasons behind a State Farm rate increase for you and other auto insurance customers.
Everyone is seeing the upward trend
You’re in good company — everyone is seeing rate increases. And it’s not just other State Farm customers either.
One of the main reasons why insurance rates are going up for everyone is because insurers need to adjust for consistent and increased losses. It’s usually due to a rise in frequency and cost of claims. Just how much are insurance companies paying out in claims? Billions.
The rise of severe weather and natural disasters are to blame too. In the U.S., severe weather has been on the rise over the past couple of years with losses exceeding over $1 billion.
If there’s been a recent weather event in your area (think: hurricane, blizzard, flood, fire), this will have an affect on your car insurance rate. But it might not be noticeable right away.
When these natural disasters or severe weather events happen, this increases the number of claims in the area. To make up for this, insurance companies raise the rates for everyone.
Why did my State Farm rate increase?
It’d be nice to know exactly what’s contributing to your increased rates. Unfortunately, it doesn’t work like that. Insurance is complicated, so you can’t point to the one reason that explains why your car insurance is so high now.
In fact, with auto insurance rate increases come from things that you don’t even have any control over.
Let’s dig in to potential factors that could be contributing to those premium hikes:
Location, location, location
If you’ve moved recently, you could’ve seen your premium increase because of it.
For example, if you moved from a rural to an urban area, you’ll see higher rates. Urban areas see more accidents, theft, and vandalism. Because of this, insurance companies raise rates to compensate for claims filed for these types of incidents.
People love to drive
When the economy’s strong and gas prices are lower, people can afford to drive more. They’re commuting to and from work, they’re driving more places to spend their income, and they’re taking more road trips.
But increased time on the road leads to a higher chance of getting into accidents and therefore a greater potential for filing insurance claims.
In 2018 alone, fatal motor vehicle crashes took 36,560 lives in the U.S. So insurance companies adjust their rates to cover these possible costs.
New technology
With each new model, cars are getting more sophisticated and more expensive. This is because newer vehicles usually come with a ton of different high-tech features. This includes things like parking sensors, back-up cameras, and lane departure warnings.
Most of these features are designed and put into production to make driving safer, but they’re expensive to repair or replace.
The cost for body work has gone up almost 40 percent since 2005. Not only that, the rise in cost of car parts has directly affected the increase in the number of auto part thefts.
People are filing more claims and expensive ones, too
The frequency and severity of claims is growing. Just between 2014 and 2016, the size of collision claims increased 8.2 percent.
It’s not just for collision claims either. In 2013, the average cost per payout for bodily injury claims increased by 32 percent to more than $15,500.
The personal factors matter too
Unfortunately, you can’t control the high likelihood of theft and vandalism in your area. And there’s no way you’re responsible for the increase in extreme weather patterns.
But not all is lost when it comes to battling against rising premiums. There are a number of things based on your own profile as a driver that you can change.
Here are a few personal factors that contribute to why you’ve been seeing your premiums go up and up.
Driving record
It’s not just the driving record of the added driver that counts. Your own driving record makes a major difference. The better your record, the lower your premium.
If you’ve had recent accidents or serious traffic violations, you’re looking at an increase in what you pay for car insurance. A speeding ticket affects your insurance, too.
Accidents can happen anywhere. But most car accidents happen in your own neighborhood, at intersections, and parking garages.
Keep a clean driving record by making sure every time you get in the driver’s seat you’re alert.
Credit score
Insurance companies in all states except Hawaii, California, and Massachusetts use credit scores to try and predict the likelihood of you filing a claim.
Having a good credit score will bring your premiums down, so it’s good to pay attention to it. Paying your bills on time and paying off debt and keeping a low balance on credit cards will help with this.
Your policy
The limits on your auto insurance, the number you landed on for your deductible, and the types and amounts of coverages all affect how much you pay.
Insurance history
Remember to have continuous coverage. A lapse in coverage will result in a premium rise.
A lapse in coverage for a short period of time can lead to a 12 percent increase. And even higher the longer you go uninsured.
If you get caught driving without insurance, you could face major consequences.
Adding drivers to your policy
Adding another driver to your policy can affect your car insurance premiums. If you add an experienced driver who has a clean driving record, it typically won’t cost you more money.
But if you add someone who has had recent accidents or traffic violations, you could see an uptick in your premium. Keep in mind, things like their gender and age might also factor into that increase.
Removing vehicles from your policy
If you sold the second family car and removed it from your policy, you could see a rise in your premiums.
It’s because you probably were getting the multi-car discount for insuring more than one car on a policy.
The car you drive
When settling on the perfect car, it’s not usually top-of-mind to think about what it costs to insure it. Everybody gets caught up in how easy it is to drive, how much it costs to buy, and of course, the color.
By the way, the popular belief that having a red car increases your premium? Completely false. The color of your car does not affect your insurance.
But the type of car you drive is a major factor in what it costs to insure it.
Besides make and model, insurance companies look at the likelihood of its theft, the cost of repairs, its engine size, and the overall safety record of the car. Typically, cars with high quality safety equipment also qualify for premium discounts.
In the future if you’re looking to buy a car, you can take a look at vehicle safety ratings here.
What if my insurance rates are still high?
Keeping an eye out for your credit score and driving record aren’t quick fixes. But there are other things you can do to offset your State Farm rate increase.
If you’re driving an older car, around 10 years or older, you can think about dropping full coverage on it and switching to a liability-only policy.
If you can handle being on the hook for paying a higher deductible, go for it. Just make sure you land a number you’re comfortable paying for if you need to file a claim.
Do you already have or need homeowners insurance? Like with the multi-car discount, you can also get a multi-policy discount. Getting a home and auto insurance bundle under one insurance company will earn you a discount.
Shop ‘til you drop
If these changes still don’t bring your premium down to what you want, you should shop around.
Getting multiple quotes from various insurers is no longer such a hassle. Apps like Cover can search the market for the best deal for you. You’ll get a quote in minutes for the coverage you want.
The idea behind shopping around for car insurance is that you never know if you’re missing out on a better deal unless you go out and see for yourself!
And if you do snag a better deal somewhere else, it’s time to switch car insurance companies. If you’re seriously considering it, here is our guide on how to cancel State Farm auto insurance.
Cover
will get you an auto quote in as little as five minutes.
All you have to do is answer a few short questions.
Get your auto quote here
