Surge in Car Insurance Rates Have Become Common


A resident of Boca Raton, Florida, mentioned that she has been insured along with her husband with an insurance company for several years. She pointed out that they have never delayed a single premium payment all these years. She added that they have never made claims, had an accident-free clean driving records with no arrests, and not even traffic violation tickets all these years. In spite of such exemplary behavior, the insurance company has increased the premium by $600. The commercials of the insurance company claim that they would never let down a single customer but she feels that they are trying to force their customers out by such sudden premium hikes.

In such cases, the lady should contact her insurance company first and ask them for an explanation about the sudden and significant increase in the premium amount. It is possible that the notice of premium hike is just a mistake that could be rectified. There is no harm in inquiring first. One possible reason for the rate hike received by the resident lady of Boca Raton could be that there had been a change in her credit score. When she contacts the insurance carrier, she would be able to obtain knowledge about any adverse information or other factor in her credit report that she was not aware of. However, if the insurance company maintains that the increase in premium is genuine and routine, the lady should think of canceling the car insurance policy and approach another auto insurance company that is able to offer better rates.

Still, a sudden jump in insurance rates is independent of clean driving records and no claims as has happened with the resident lady of Boca Raton. Insurance business itself is considered as a shared risk business. If claims have suddenly gone up in the area in which the lady is living, the insurance companies would automatically increase the premium rates of all policyholders irrespective of their records.


An insurance professional confirmed that this could be one reason for the sudden hike notice received by that Boca Raton resident lady. Vice President of a reputed insurance company provided certain vital information related to car insurance situation in his blog. He pointed out that insurance companies paid around $18 billion in 2010 in the United States but the payment against claims doubled in 2011 to $36 billion. The global payments surged to more than $100 billion in 2011. In simple terms, if the insurance companies were collecting $1.00, they were paying out $1.16. That is a substantial loss. The Vice President concluded that 2012 could be even tougher for insurance companies and hence premium hikes are going to be quite common.

If you face a sudden and significant premium rate increase, you should contact an auto insurance agent operating independently and obtain quotes from multiple insurance carriers with high ratings like A or A++. Another easier option is to combine your auto insurance with home insurance, health insurance, etc. with one carrier, in which case, the insurance carrier would offer you lesser premium rates.

However, another lady, a resident of Merritt Island, Florida, commented that she received a sharp increase in her car insurance premium rate and the carrier claimed that the hike was permissible under the laws of State of Florida. She canceled her current policy and obtained a new car insurance policy for less than half the amount she had been paying until now.