One financial writer described a car wreck as a one-two punch. The collision happens first, and a higher insurance premium is the second blow. This is how things work in the insurance industry.
Most drivers understand that some things can cause their insurance rates to rise. Causing an accident, getting a traffic ticket and adding a young male driver to the policy are obvious examples. There are times, however, when a higher premium can surprise them.
In reality, car insurance premiums can increase for a number of reasons. An agent may forget to explain some of the reasons, or a consumer may forget them over time. Here are five uncommon reasons for rate hikes, and how consumers can prevent them.
1. Older Age – Turning 50 can be hard on the psyche and the wallet. According to some insurance agencies, people over 50 are “older” drivers who are more prone to accidents. Not every insurance company raises premiums for older drivers, but many do. Interestingly, the National Highway Traffic Safety Administration (NHTSA) says the safest drivers are between the ages of 64 and 69.
2. Credit Rating – Most insurance companies equate a poor credit rating with a higher insurance risk, and they adjust the rates accordingly. This is a controversial practice, but it happens often. A poor credit rating often means a missed credit card or mortgage payment, or perhaps a few bad checks. This could make a driver a less reliable insurance customer.
3. More Mileage – Insurance companies often raise the rates when drivers add more miles to their yearly average. In their opinion, the more miles a customer drives each year, the more likely he or she will have an accident. People who commute long distances to work and back usually pay higher insurance bills.
4. A Friend’s Wreck – When someone loans his or her car to a friend, and the friend has an accident, the car owner’s insurance increases. This seems unfair, since the owner was not behind the wheel at the time of the accident. If the friend pays for the repairs, there are no worries. However, if the car owner has to file an insurance claim, the rates will likely rise.
5. Marital Status – Drivers who are single usually pay higher insurance rates than married people. Statistics show that married drivers are less likely to have accidents or get speeding tickets than single people. Moreover, if a married person does have an accident, the expenses are usually less costly than a single person would incur.
Most drivers in Georgia understand the common causes of rate increases. An Atlanta GA insurance agent can explain the more unusual reasons for rate hikes. Being aware of the things that can increase insurance premiums can help drivers choose the right policy for their needs.
