What are some key factors that affect your auto insurance policy?


Whenever an insurance claim is made the insurance company tends to consider the policy holder as risky.  Under such circumstances the insurer will raise the premium of the policy holder.

Why do the policy premiums increase after making a claim?

When the policy holder makes a claim the insurer might have to pay for the following:

  • Repair the damages to your vehicle as well as any other property.
  • Provide for medical treatment for you as well as passengers in the car.
  • Reimburse lost wages as well as other damages.

If the other party that was involved in the accident was uninsured then your insurance provider will have to bear all the expenses and this could cost quite a bit.  Most often when an insurance claim is settled the insurance company will try to recover that amount from you.  However, in most cases they will be unable to recover the entire sum.  So, when the policy is renewed they will make you pay higher premiums in order to counter the risks of any future claims.

What are the other factors which will affect the auto insurance premiums?

  • Traffic violations, such as a speeding ticket may not necessarily pose a direct threat to your insurer but it would certainly add up to the risk.  Traffic violations and tickets for these violations will reflect the carelessness of an individual.  If insurance companies think that you are a careless driver, then you will have to pay higher premiums.
  • If there are too many claims that have been settled by your insurer, even the claims made by other policy holders then your premiums may go up.  Although you might have nothing to do with this, but when there are way too many claims made by policy holders, the insurance company will hike the rates of all policy holders in their company.
  • Every time you add a new driver to the current policy, the premiums will go up.  This is irrespective of the age of the driver, the driving record, etc.  The rates may be even higher if the new driver is someone who is very young and inexperienced or maybe someone with a not-so-good driving record.

These are some of the key factors that will increase or bring about a change in your policy.  However, there are many ways that one can avoid the hikes in rates and in fact bring down auto insurance rates.