Have you noticed that your auto insurance went up when your policy was renewed this year? If so, you're not alone—many drivers are seeing increases depending on their insurance provider. Auto insurance rates can vary a lot from one person to the next and even from vehicle to vehicle. That's because your rate is calculated using several different risk factors. But can your insurance company raise your rate without giving you a heads-up? Let’s take a closer look.
Can auto insurance rates rise without warning?
Generally, no. Insurance companies typically send you notices at least 30 days in advance of your renewal date with your new policy rate. This advance notice gives you ample time to review the terms of your new insurance policy, including your rate increase, and then shop around if you choose to.
However, if your insurance company doesn’t have your correct address, it might seem like your premium went up without any notice—especially if your policy is set to auto-renew. But that's not the case—your notice just went to the wrong address. That’s why it’s so important to make sure your information is always up to date with your insurance provider!
When can your insurance company raise your insurance premium?
Generally, your insurance company can’t raise your rate in the middle of your policy term because your premium is locked in for that period, which is typically a year. So, if you're receiving an increase, it will likely happen when your policy is up for renewal.
However, if you update your policy to reflect changes like driving fewer miles, changing your vehicle, adding or removing coverages or starting to use your personal vehicle for business, it could lead to a mid-term policy adjustment. This depends on your insurance provider, but typically, the policy would be updated during the term to reflect the new level of risk.
What factors determine my car insurance rate?
Here are some of the factors that insurance companies use to determine your car insurance premiums:
Your driving record
One of the biggest factors that affects your car insurance premiums is your driving record. If you’ve had accidents, traffic violations, or made claims in the past, you’ll likely pay more than someone with a clean record. Insurance companies look at your driving history to gauge how risky it is to insure you, and a less-than-perfect record means they see you as a higher risk.
Your vehicle's make and model
The kind of car you drive impacts your insurance rates, too. Some cars are more expensive to repair or replace, and certain models are more prone to accidents. If you have a high-performance or luxury vehicle, you'll probably pay more for insurance than someone with a more standard car.
Your location
Where you live also plays a big role in determining your car insurance rates. If you’re in an area with heavy traffic, high crime, or lots of accidents, you’ll probably pay more for insurance. That’s because insurance companies factor in these risks when calculating your premium.
Your age
While martial status is a common misconception, your age is another factor that plays a role. This is because young drivers are statistically more likely to be involved in an accident due to their lack of experience on the road. However, in the event that you get your licence later in life, you may still have higher rates due to lack of experience.
Your coverage
There are many types of car insurance, and making changes to your coverage can affect your premiums. If you raise your coverage limits, include extra coverage options, add a new driver, or increase your deductible, your insurance cost will likely change.
Your insurance company
Finally, insurance companies might raise premiums for reasons outside of your control. These can include things like higher operating costs, new industry regulations, or shifts in the overall risk level of their customers.
Why did my insurance premiums increase?
Even if you haven’t filed any new insurance claims this past year, your car insurance premium can still go up. That’s because several things can cause your insurance premium to go up. Let's break down some of the possibilities:
You were in an at-fault car accident
If you're in a car accident that's determined to be your fault and an insurance claim is made, either by you or the other party, it will affect your insurance history. This usually means your premium will go up unless your policy includes accident forgiveness coverage.
For you to be found at fault in an accident, investigators must determine that you're at least 50% responsible for the collision. Even if you have a clean driving record, your premiums can still increase by 30% or more after an at-fault accident. If you have accident forgiveness coverage, you may be able to avoid the increase in premium on your first accident with this coverage.
You've received traffic tickets
Did you know your insurance will likely increase after receiving speeding tickets, distracted driving tickets, DUIs, and similar violations? In fact, the more serious the offence, the bigger the impact on your premium. Major offences could even lead your insurance company to cancel your policy, forcing you to get high-risk auto insurance, which is much more expensive than regular coverage.
You purchased a more expensive vehicle
With newer cars featuring advanced tech like electric vehicle batteries and driver assistance systems, repairs have become more complicated and costly. Also, if your car has parts that are hard to find or need to be shipped from far away, your insurance will likely be more expensive.
So, while choosing a car with all the latest features or buying that classic car you've had your eye on is great, it could mean higher insurance premiums.
The vehicle you own is known for being stolen
In Canada, a car is stolen every six minutes, with thefts on the rise in places like Ontario, Quebec, PEI, and Newfoundland. And while yes, any car can be stolen, some models are easier to steal than others.
To cover that risk, insurance companies may increase your premium—sometimes by as much as 20% at renewal, depending on the model. Some insurers are even adding a high-theft surcharge for drivers of these more vulnerable vehicles.
You missed an insurance payment or two
You may not realize how much missed payments or cancellations for non-payment can affect your insurance record. If you miss payments during the year, many companies will require you to pay the full premium upfront.
Also, if your gets cancelled for non-payment, the same insurer may not offer you a new one. You’d likely have to switch to a high-risk auto insurance provider, which, again, comes with a much higher price tag.
You let your car insurance expire
If you forget to renew your auto insurance and let it expire, you might have to reapply for a whole new policy with your provider. The problem is that a lapse in coverage can make you look like a higher risk, which could lead to a higher premium.
And just like with missed payments, your previous provider might refuse to offer you a new policy because of your increased risk, and you’d need to find a high-risk insurance provider, which typically costs more.
Can I appeal my auto insurance rate increase?
If your rates go up because insurance regulators approved an increase to cover rising costs, there’s not much you can do to appeal. But if you believe the hike is due to a mistake related to your driving history, you’ve got a better chance of getting it reduced. The important thing is to contact your insurance provider or insurance broker to understand exactly why your rates went up.
How to reduce your car insurance premiums
Whether it’s appealing past mistakes or asking about discounts, there are plenty of ways to try to bring your car insurance back down to something more affordable. Here are a few ways to help you save on car insurance:
Bundle your policies
If you have other insurable items like a home, cottage, boat, or RV, you can bundle those policies with your car insurance and save! Plus, bundling makes things easier by keeping all your policies in one place, which simplifies your paperwork.
Use a car insurance tracker
If you consider yourself a cautious and safe driver, using a car insurance tracker with usage-based insurance could be a great option. With this type of coverage, the tracker in your car tracks your driving habits, and your rate is based on how much and how well you drive. It's especially beneficial for people who don’t drive a lot.
Ask about insurance discounts
In Canada, insurance companies offer various discounts for things like being a safe driver, a student, a senior, or even for owning multiple cars. Be sure to check with your insurance broker or provider to see if you qualify for any additional discounts!
Ask to have your driving history reassessed
Most tickets only stay on your record for about three years, and at-fault accidents can clear after six. If an old ticket or infraction is still affecting your rate, you might have a reason to appeal. The same goes if you think you were unfairly blamed for an accident—you can ask for the decision to be reviewed and potentially overturned.
Contact BrokerLink for more information on car insurance
At BrokerLink, our team of auto insurance specialists is here to answer all your questions, whether you’re wondering about your policy renewal date, potential rate increases, or when to report an accident to your insurer. You can count on us for all your car insurance needs. We can provide a free quote, shop around to find you a great policy, or even help with tasks like renewing your car insurance. Get in touch with us today to learn more!
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