Auto insurance helps protect you from the costs of damage to your car and other people’s property, as well as injuries to yourself and others if you get in an accident. It’s important to get reliable coverage, but you don’t want to overpay for it.

Unfortunately, an unexpected insurance premium increase can throw off your entire budget. We’ll look at how car insurance rates are set, when and why your rates might increase, and what you can do to reduce the amount or likelihood of a premium increase.

How Auto Insurance Rates Are Determined

  • Car insurance companies use a variety of factors to determine your car insurance rate, including:
  • Location: Where you live can affect your rates.
  • Age and type of vehicle:Some vehicles cost more to insure than others.
  • Annual mileage: The more you’re on the road, the more you’re at risk of an accident.
  • Driving record: Recent traffic violations or accidents often lead to higher rates.
  • Gender and age: Your gender and age can affect car insurance rates; men and young drivers tend to be considered riskier.
  • Marital status: Married couples tend to have a lower risk of accidents.
  • Prior coverage: Insurance companies want to know your relationship with past insurers.
  • Credit history: Some insurance companies use your credit score to determine rates in states where this is allowed.1

The amount and type of coverage you choose can also affect your rates. For example, choosing a lower deductible, carrying multiple coverages (such as comprehensive and collision coverage), and higher amounts will increase your rate.

Factors That Can Cause Insurance Premium Increases

After your policy is in place, your cost of car insurance can go up for several reasons—both within and outside of your control.

Traffic Violations

Traffic violations are a common reason for an insurance premium increase. Violations are generally considered minor or major based on their severity. Minor violations are usually not criminal. You’ll typically pay a fine and not need to appear in court. Major violations, on the other hand, are a minimum of a misdemeanor charge and usually require you to appear in court.

  • Examples of Minor Violations
  • Speeding
  • Running a red light
  • Blocking traffic
  • Failure to yield
  • Failure to signal
  • Following too closely2

Examples of Major Violations

  • Reckless driving
  • Driving under the influence of drugs or alcohol
  • Driving on a suspended license
  • Speeding in a school zone
  • Vehicular manslaughter
  • Driving without insurance34

The type of ticket you receive and how you handle it can affect how much your insurance rate will increase. You may also be able to avoid an auto rate increase by taking a defensive driving program in certain states.

Some insurance companies even offer minor accident forgiveness. This add-on feature to your auto insurance waives the premium increase if you’re issued a minor traffic violation. You’ll have to meet requirements to add this coverage and there are usually restrictions on the type and number of violations that can be forgiven.

At-Fault Accidents

An at-fault accident is one that you cause by failing to act—such as not braking in time and rear-ending a slow-moving vehicle—or by taking actions like speeding or drinking and driving. At-fault accidents apply in most states, but several states have no-fault accident laws. In a no-fault state, each driver in the accident files a claim with their own insurance company.

If you live in an at-fault state, an accident that you cause will usually increase your insurance premiums. Some insurance companies only increase your premium if repairing the damage costs more than a certain amount. The good news is that your insurance company will likely stop charging you extra for the accident if you remain accident-free for several years.

To determine the fault of an accident, your insurance company—and the other driver’s insurance company—will assign an insurance adjuster to look at the available evidence from the accident. This could include photos, police reports, eye-witness records, and physical evidence of damage to the vehicles. A citation for texting and driving after causing an accident, for example, could be used to prove you were at fault and raise your insurance rates.

Comprehensive Claims

Comprehensive coverage is optional car insurance that helps you pay for damage to your vehicle from factors outside your control. For example, if your car is vandalized or damaged in a fire, your comprehensive coverage helps cover the cost of repairing your vehicle.

Depending on your insurance company, filing a claim related to your comprehensive coverage could increase your rates. Others may only increase your rates if you make multiple claims or receive a claim that’s above a specified amount.

Since rate increases vary by carrier, ask your insurance agent how the insurer handles comprehensive claims before signing up.


Getting more experience behind the wheel is usually a good thing, but age can also increase your risk of being injured in an accident. As you age, your body is more vulnerable to serious injuries or death when involved in a car accident. Likewise, declines in vision, cognitive functions, and other physical abilities can make driving riskier for some older adults.5

Since accident rates tend to increase for people over age 65, insurance companies raise premiums to protect against this higher risk.6 Luckily, some carriers offer discounts when you complete a safe driving course or install a safe driving app on your mobile phone.

Lapse in Insurance

A lapse in car insurance is never good. Being uninsured for even a short time can lead to higher premiums and potential fines or license or registration suspension from your state.7 If your coverage lapsed recently, contact your insurance company right away. You may be able to reinstate your policy through your current insurance carrier, such as by paying a missed premium. 


Whether you move across town or to a new state, a new location could change your car insurance rates. Depending on where you move, this could mean getting lower or higher rates. Reasons your insurance rates might increase after moving include:

  • Higher population density or more traffic activity on the road
  • More accidents in the new location
  • Higher crime rates, including vandalism or theft

If you’re moving within the same state or city, you may be able to keep your existing insurance policy and simply update your address with your carrier, although your premium may change. An out-of-state move, on the other hand, is a little more complicated. Since different states have different insurance laws and requirements, you’ll have to get a new policy when you move. 

A Drop in Credit Score

Some insurance companies use parts of your credit history to determine your car insurance rates. If your score goes down after you purchase car insurance, there’s a chance your insurance company will use this new credit information and look at additional factors to update your premiums.

Some states don’t let insurance companies increase existing premiums based on changes to your credit score, and a few states don’t allow insurers to base premiums on your credit history at all.

Reasons your credit score might drop include:

  • Paying bills late or missing payments
  • Maxing out your credit limits
  • Applying for new credit

Life changes, like losing your job, could also affect your ability to pay your bills on time and potentially lower your credit score. These changes could negatively impact your score, which may be used by your insurance company to determine your new insurance rate at renewal.

Criminal Convictions

Criminal convictions—especially those related to driving, like DUIs—can affect your car insurance premiums. In most cases, a DUI is a criminal offense. If you have a history of criminal driving violations, you are more likely to be considered a “high-risk” driver and be charged higher premiums.

In some situations, being convicted of DUI could lead your insurance company to reject your policy renewal. Other common driving-related crimes that could lead to a nonrenewal include car-related homicide or assault and reckless endangerment when driving. 

Your Carrier’s Rates Changed

Some changes to your car insurance rates aren’t directly related to you. Insurance providers regularly review the data available to them and may adjust premiums for all policyholders if current rates aren’t covering losses.

For example, if an insurance company has had to pay out weather-related claims at a higher rate over the past few years, its current insurance premiums may not cover the costs. The insurance company then raises rates for everyone—even if you haven’t had a claim—to cover the higher risk.

Or, if more drivers are getting into accidents because of an increase in texting and driving, an insurance company may increase rates across the board.

Talk to your insurance agent when your rates go up—it could be a good time to review your policy and look for any discounts or savings you might be missing. 

How Can I Avoid Paying More for Car Insurance?

You can’t control every factor that goes into your car insurance rates. However, there are ways you can try to avoid insurance premium increases or lower your existing rates. Focus on the factors within your control, such as:

  • Being a more alert, defensive, and safe driver
  • Shopping around for new insurance if your rates increase too much
  • Bundling your car insurance policies for all vehicles with one provider
  • Considering insurance costs when buying a new vehicle (e.g., It generally costs more to insure a luxury or electric vehicle.)
  • Asking about discounts you might qualify for
  • Reducing your annual mileage
  • Improving your credit score by making on-time payments and limiting your spending

These simple steps could help you lower your car insurance rate and help you avoid premium increases within your control.

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