Report: 3 Small Things That Can Send Your Auto Insurance Skyrocketing

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Even if you have cheap car insurance, you may have seen your rate unexpectedly jump by a big percentage.

In this article, I’ll discuss three things that will cause your car insurance rate to increase. I’ll also look at how much of an increase each one of those things will cost you.

The data comes from BankRate.com, which recently released its annual report on The True Cost of Insurance.

The report looks at annual car insurance premiums nationally and by state and finds that the current national average for an annual car insurance premium is $1,674. The report also lists “life events” that can cause your premium to skyrocket.

These 3 Things Can Cause Your Auto Insurance To Go Up by Hundreds of Dollars

Money expert Clark Howard says a lot of motorists cause their insurance rates to rise by filing claims for small incidents and fender benders that may be best sorted out without involving your insurer.

“You only want to make insurance claims when something big has happened,” Clark says.

If you make a claim on a small incident, you may end up in an insurance company “penalty box,” according to Clark. “They may even put you in an industry database if you’ve made a claim,” he adds.

Here are three examples of small incidents that BankRate.com says can cause your auto insurance rates to climb by hundreds of dollars.

1. A Speeding Ticket

Your lead foot could cost you.

In Hawaii, a speeding ticket will raise your rates an average of $149 per year, while in Wyoming, that number could be $537!

According to BankRate.com, the nationwide average for how much a speeding ticket will add to your annual insurance premium is $355.

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2. A Car Accident

A car crash can not only put you on the hook for a new vehicle, but it can also cause your auto insurance rates to rise.

According to the report, a car accident can add an average of $731 in extra costs to your annual premium.

An accident in California can add $1,500+ to your premium, while in New York, you may get a bump of $307.

Because auto accidents play such a big role in auto premiums, Clark recommends that you get a dashcam. It could help you prove you’re not at fault if the question ever comes up.

“I look at them as ultra-cheap insurance,” Clark says of dashcams. “I particularly recommend these for people who have a tendency to drive more cautiously.”

Clark.com’s sister site ClarkDeals.com routinely lists sales on dashcams.

3. A Lapse in Auto Insurance Coverage

This one is easier to prevent than an accident: Failing to keep your car insurance current at all times can cause your rates to rise.

A lapse in auto coverage could cost you $187 in higher premiums, according to BankRate.com. That’s the national average its report found.

If you live in California, the average policy increase for a lapse in coverage is $63, while in Florida it’s $337.

If you add up just those three things — a speeding ticket, an accident and a lapse in auto coverage — you could end up inadvertently adding more than $1,200 to your premium.

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Using the national averages from the report for all the figures, these three small “errors” could almost double how much you pay for car insurance each year.

EventAmount
Speeding Ticket$355
Auto Accident$731
Auto Coverage Lapse$187
Total$1,273

Read BankRate’s complete report on the True Cost of Auto Insurance 

Final Thought

One way Clark saves money on his car insurance is by opting for a higher deductible.

While it’s true that a higher deductible means you pay more money upfront if you make a claim, Clark says there are two very good reasons to choose a higher deductible: 

  • It reduces the overall cost of your premium.
  • It discourages you from making smaller claims that raise your rates.

“Take your deductible as high as you can,” Clark says. “As high as either your insurer will permit, or if you have a loan against the vehicle, that the lender will allow. It will usually be $1,000,” he says.

Want to keep more money in your wallet? Here’s how to save on car insurance.

More Car Insurance Resources From Clark.com:

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