Non-Accident Related Reasons for an Auto Insurance Increase

You already know that your insurance premium is likely to increase after a car accident or a series of traffic violations, but you can also expect a rate hike from things that aren't influenced by your driving record. I recently noticed a marginal increase in my car insurance premium and my insurance agent informed me that it was just an adjustment for inflation.

Insurance companies can raise premiums for several reasons over the course of the year. When you're up for renewal, make sure you're aware of how much of an increase this is and if your driving record had anything to do with it. Here are some of the most common non-accident related reasons behind an auto insurance premium increase:

Rising Auto Repair Costs

Since insurance providers will be responsible for covering some or all of the costs of auto repairs after an accident, they need to accommodate for rising repair costs. If auto repair shops and mechanics are increasing their service fees in any given year, auto insurance providers are likely to do the same.

Rising Medical Costs

Just like auto repair costs, the insurance company needs to account for rising medical costs. Doctor's fees, surgery costs and general medical care costs are on the rise, and the insurance company will raise the premium to ensure they can fully cover these costs under various policies.

Inflation

Changes in the economic climate can also affect your insurance premium. Auto insurance providers are constantly evaluating their costs and rates, and work hard to stay competitive. They have to adjust for inflation from time to time, and consumers usually end up paying more for the same premium - even with a spotless driving record.

Change in the Use of Your Vehicle

If you originally purchased insurance for a car that was used primarily for leisure purposes and you're now using it as a commuter vehicle, your insurance premium will increase. Since you'll be driving the care more often and possibly in more traffic, the insurance company looks at this as a riskier situation.

General Policy Fees

If the insurance company tacks on any type of fees while your policy is in effect, you'll notice an increase in your premium during the next billing cycle. These fees may or may not be prorated, depending on the insurance company's terms and conditions. Make sure you check your statements each month to determine whether you are incurring any new types of fees imposed by the insurance provider.

Sources:

Farmers Auto Insurance - Premium Questions

Auto Insurance Tips - Top 10 Reasons Why Auto Insurance Providers Raise Premiums

4 Car Insurance Quotes - 19 reasons why car insurance premiums increase