So you just got your Ohio car insurance renewal and noticed that your premium increased. Maybe even a lot. And you're angry. You want to know why and you want to know NOW …
Trust me, we fully understand why you are angry. But before you blow your whistle, keep reading. This post is the ultimate guide to why car insurance premiums are increasing. Chances are good that you will find the cause below. And if you do not, you have the right information to start asking questions about your own car insurance in Ohio.
Cause 1 – Your insurance company had an interest rate increase
For 99% of insurance companies, when you pay your car insurance premium, it gets lumped together with others who pay their premiums. When receivables are paid out, they are paid from the same premiums. So if Joe Smith has a claim, the premiums you paid Joe Smith will help fix his car or pay medical bills for someone he is injured (a simplification, but you get the point).
Insurance companies keep a minimum amount in the reserve for damages payments (often state law requires this). When the amount falls below the lowest, the insurance company raises premiums across the board to replenish the amount.
Most government insurance departments also require justification and must approve an interest rate increase from the insurance company. So even though it may seem like the insurance company suddenly decided to raise interest rates for no reason, this is usually not the case.
One of our companies, Erie Insurance, offers coverage called Rate Lock / Rate Protection which guarantees that your premium stays the same (unless you make one of three qualified changes). No other company offers this advantage. Call us at (937) 592-4871
Cause 2- You had an error accident that resulted in a claim
Many insurance companies add car insurance after an error accident. Usually it depends on the amount paid on the claim. For example, company A can add insurance if the claim is over $ 1,000. The supplement can last for several years as well. Or maybe the first one was forgiven, but you had a second accident. The same principle still applies. So if you had a crash that was over the threshold, that could be the cause. Ask your agent what the minimum amount is for a surcharge to apply.
Cause 3 – You have a fast ticket. Or two.
Unfortunately getting a ticket can raise your prices. It shows that you run a higher risk of having an accident and causing a claim for damages. Insurance is about risk and those who are more risky pay more money.
Cause 4- You lost a discount
Most insurances have several discounts included and if these discounts expire or if you no longer qualify, your tax rate may increase. If you get a discount for being accident-free for several years and then have an accident, the loss of the discount will increase your tax rate. Maybe you got a discount for having your EFT policy or paid in full and you changed your payment plan. You may see a slight increase here as well. The point is, there are many possible reasons to lose discounts. So ask if that could be the reason.
Cause 5- You moved to the big (or bigger) city
Prices are also calculated based on the zip code where you live. Let's say you've lived in a small town. You decide to move to a metropolitan area. Pretty good chance premium will increase due to larger population and greater chance of an accident occurring.
Cause 6- You bought a new (or newer) vehicle
Let's say you drove a 20 year old car. You decide it's time to upgrade and buy a 2 year old car. Chances are good that your 20 year old pickup was only responsible and now your new car needs extensive and collision coverage. The fact that you add coverage that was not there with the old vehicle obviously means an increase.
What happens if your old car HAS extensive and collision? Extensive premiums and collision premiums are determined by rating symbols. These symbols are determined by factors such as repair costs or probability of theft. So the higher the symbols the higher the premium. It is always possible that you went from a vehicle with a low symbol to a higher symbol. If you are not in the insurance business, you would not know it. So let your agent list all the vehicles you intend to buy to avoid an unpleasant surprise!
Cause 7- You added a teenage driver
Teenage drivers are VERY expensive – they are the most risky drivers on the road due to lack of experience and frequency / severity of accidents. So when you add a new teen driver to your policy, you will see a decent size increase, usually several hundred dollars.
Cause 8- Your insurance points have changed
Since 2003, the Ohio Department of Insurance has allowed the use of insurance points in car and home grade insurance. An insurance point depends heavily on credit information. Although each insurance company uses its own insurance score model, some of the biggest factors affecting your score are:
- Bankruptcy, foreclosure, withdrawal
- Credit history – late payments, missed payments
- Length of credit history  Number of credit lines  Type of credit
- Outstanding debt
- Inquiries about your credit history
If your credit history suddenly changes for the worse, you will probably see a premium increase. For more information on how and why insurance companies use credit history when determining premiums (along with helpful tips for improving your score), read "What You Need to Know About Insurance Credits" from the Ohio Department of Insurance.
Cause 9- You changed your policy sometime during the policy period and are currently seeing the FULL impact
This is probably the most common reason. And let's face it, something we did 6 months ago is harder to remember than something we did last week. Here's an example: Let's say your policy applies from June 1st to May 31st. Maybe you replaced a vehicle or added a driver (like a teenager mentioned earlier) on November 1st. You will only be charged a premium from the change date until May 31, the end of the insurance period. It is called pro-rata premium. But when you get your renewal for the following June 1, you will of course see a higher premium, because you now see premiums for the ENTIRE insurance period. So it may look as if your insurance premium increased significantly, when in fact you only paid premium for that part of the insurance period and at the renewal you see the full impact of the change.
Cause 10- The company made a mistake
I know right? But honestly, I've seen it happen. In fact, the most common mistake we see is the removal of the car / home discount. One house is sold so that the policy is canceled, but another policy is written for another house and the system does not take up the new policy. So, yes it does happen! And this discount can often vary between 15 and 20 percent, so you would definitely notice that change! When in doubt, ask.
Is It Time To Review Your Ohio Car Insurance? Call us at (937) 592-4871 or fill in the form below and we will be happy to see what we can do for you!