Why auto insurance rates increase
February 24, 2023
Massachusetts auto insurance premiums rose 0.5% last year. Though this is a relatively modest increase compared to the to the 12% year over year increases that have been seen nationwide in 2021 and 2022, it doesn’t mean that Massachusetts premiums will continue to have lower than average increases. There are many factors that affect auto insurance premiums, both in terms of nationwide trends and personal factors. Let’s take a look at a few of the major ones.
Nationwide trends
Repairing and replacing vehicles costs more
The auto industry has seen its share of labor shortages and supply chain disruptions over the past year. The demand for technicians has outpaced the available labor supply pool, leading to higher labor costs. Strained supply chains have also caused prices for parts and vehicles to spike dramatically. At the time of publishing, prices have just started decreasing due to less pressure on the supply chain, but still remain high.
How does this affect premiums? Well, as repair costs go up, the amount insurers pay to fix their customers’ vehicles goes up. Additionally, as vehicle values rise, insurers pay more to help replace their customer’s totaled cars and trucks. This increased cost for carriers is then offset by increased premiums.
Accidents are increasing, leading to more claims
The number of car accidents has increased across the nation, leading to more insurance claims. 11.9% of Massachusetts drivers reported to have an accident on their record in 2022. This is 37% higher than the national average. With more accidents in Massachusetts, auto insurance premiums must rise in order to afford compensation for more drivers.
Personal factors
While trends in the auto industry and auto insurance rates may be out of your control, there are things within your control that factor into the price of your auto insurance premium.
Change in your driving record
Accidents may be the most common incident to negatively affect your driving record*, but there are other incidents to keep in mind that may be more within your control. Speeding violations, reckless driving, and driving while intoxicated can increase premiums. If you’ve filed a claim in the past few years, you also might see your insurance premium increase. Do your best to remain on guard while driving, and maintain good, non-aggressive driving habits.
*Note: At-fault accidents are not the only time you could see your insurance premiums increase. Your premium can increase after an accident, even if you are not at fault.
Changes in your credit score
Your personal insurance is combined with several other factors to determine your home and auto insurance premium. Your credit score affects your personal insurance score. Any drastic changes in your credit score year over year can have a great effect on your insurance premiums. For tips on improving your credit score, check out this article from our parent company Webster First Federal Credit Union: How to Bring Your Credit Score Up.
If you think that there is misinformation related to your credit score, you can contact Equifax to resolve the problem. Your insurance provider may reevaluate your premium based on the corrections made to your credit information
How much you drive
The more you drive, the more opportunity there is to get into an accident. Let your car insurance company know if your lifestyle changes and you’re driving less, such as a switch to full or part-time remote work, because you may be eligible for lower rates.
The car you drive
Generally, a new car costs more to repair after an accident. New cars are also at a higher risk of break-ins and theft. Keep in mind though that luxury cars aren’t the only ones that are at a high-risk of theft. Thieves also target cars with high-demand parts. Talk to your insurance company about how your auto insurance rates will be affected.
Adding a driver to your policy
If you have other drivers named on your policy, or add new driver to your policy, their personal factors as listed above will affect your auto insurance rates. Adding a teenage driver generally bumps your rate up, due to the high risk associated with new drivers. If you’re planning to insure your teen driver, make sure to look for Good Student Discounts. If they have a GPA of a B or better, they may qualify.
Statistics where you live
Insurance companies take factors beyond car and personal driving habits into account when determining your rate. For instance, the following location-based factors can cause your insurance rate to increase for seemingly no reason at all:
- Crime rate
- Increased accidents in your area
- More uninsured and underinsured drivers on the road in your area
- Insurance fraud
- Increased natural disasters
A change in applicable discounts
Everybody loves a discount. Each year, you may become eligible or ineligible for a discount depending on a variety of factors such as if you bundle home and auto, membership in groups like AARP, good driver discounts, and others. For example, an introductory discount offered for the first year of your policy may expire, increasing auto insurance rates. But, perhaps you switched to electronic statements, making you eligible for a different discount. Check your statement and contact your insurance company to see what discounts you may qualify for.
We’re here to help
If you’re looking to get better rates on your car insurance policy, WebFirst Insurance can help. We’ll work to get you the right coverages for your needs, at a cost that fits your budget. To learn more about our auto insurance, click the “Learn More” button below.