5 Reasons Why Your Car Insurance May Be Going Up

Auto insurance premiums can increase due to unavoidable factors that can increase your perceived risk to providers.

Elliot Rieth | 

Dec 9, 2024 | 4 min read

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You're a safe driver, so you may be surprised to find that your insurance premium is on the rise. While economic conditions such as inflation and personal circumstances such as a recent accident may impact your car insurance premium, there are also a number of non-economic and individual factors outside of your control that could cause your insurance costs to go up.

If you've received notice that your monthly payments are increasing, there are a few external factors that could be at play. To better understand what may be causing a spike in your premium, consider which of the following may apply to you.

Nearby Car Accidents Have Increased

According to the Insurance Information Institute, the number of crashes in your area are one of the top factors insurance companies consider when determining your premium.

Even if you're not directly involved in these accidents, a higher number of claims in your coverage area may drive up costs for car insurance providers and increase their financial risk. To recoup these costs, they will likely increase premiums for those in the affected region.

A Rise in Extreme Weather Events

Hail, hurricanes, floods, tornadoes, and more can increase the number of claims in a specific area. You may experience a rise in insurance premiums after one of these severe weather events, even if you aren't personally impacted. Insurance companies often increase premiums across entire regions struck by devastation to mitigate the costs related to a high number of claims.

You Moved to a New Neighborhood

If you've moved recently, you may see your insurance rates spike. Depending on the area where you now live, there could be a few factors that increase your monthly costs.

Metropolitan areas tend to have more cars, more traffic, and more accidents than less populated regions. This makes them a higher risk for insurance companies to cover, leading to increased coverage.

Crime in your area can also impact your monthly costs. If you move to a place with more theft or vandalism claims, your insurance will likely rise accordingly.

Moving from one state to another can also have a significant impact on your insurance premiums, as states have varying insurance costs and requirements.

Depending on each state's geography, weather, population, and insurance requirements, your insurance costs could go up or down. According to financial information site MarketWatch, Michigan typically has higher-than-average car insurance costs, while Hawaii has lower-than-average costs.

There Are More Drivers on the Road

As the population of the U.S increases, so does the number of licensed drivers on the road. According to 2022 data from the Federal Highway Administration, there were 235 million drivers and 283 million registered vehicles on the road in 2022, an increase of 2 million drivers and 1 million vehicles from 2021.

When roads become more congested, there is an increased risk of accidents. Insurance companies take driver numbers into consideration, especially depending on location, when determining monthly insurance premiums. As driver numbers go up, it's likely your premium will follow.

The behavior of these drivers will also determine how much your car insurance spikes. If drivers are going faster, driving more recklessly, or are more distracted while driving in your area, your insurance will likely take notice and raise rates to avoid any potential risk.

You Just Celebrated a Birthday

For insurance companies, there are two age groups they consider particularly risky to insure: teens and seniors. That's why they charge these two groups more than the average.

If you've recently entered your mid-70s, you may start to see age-related increases in your monthly premium. Even if you're taking advantage of a senior discount, you may still be paying more than you were before your provider considered you high risk.

In the same way, adding a minor to your policy may increase your overall costs by more than expected. It's unlikely that teen drivers will have a similar monthly premium as you, as they are typically considered the highest-risk drivers by insurance companies.

Elliot Rieth

Born and raised in Michigan — the center of the American automotive industry — Elliot's fate of becoming a writer in the automotive space was seemingly predetermined. In addition to covering cars and personal finance for Capital One, he's worked directly with dealers and OEMs to create digital content meant to educate consumers. He's also passionate about music and has written for outlets like In Review Online. When he isn't writing about the latest financial, automotive, and insurance trends, he can be found enjoying a new book or record alongside his two greyhounds.