Why Did My Car Insurance Go Up?

Written by |

Has your auto insurer recently hit you with a hefty price increase on your premiums? If you haven’t had any tickets or accidents, you might be wondering why your rate is going up. And you’re not alone.

J.D. Power reports that, “nearly one-third (31%) of U.S. auto insurance customers say they experienced a rate increase during the past year.” And many drivers facing rising rates — myself included — haven’t experienced any of the events that are well-known for hiking up insurance rates.

In this article, we’ve got answers to the question: “Why did my car insurance go up?” Keep reading for lesser-known factors that can cause your insurance to go up, including:

Changes in the Insurance Industry

It can seem like your insurance is going up for no reason if your premiums increase when you haven’t changed anything as a driver. But money expert Clark Howard says that’s not usually the case. There are many reasons why your insurance can increase, and many of them are completely out of your control. Clark says:

“First off, the number of accidents is going up because of distracted driving. And second — with so much technology being built into cars — the cost of repairs has skyrocketed. So, you have a lot of vehicles that would once get fixed being declared a total loss by insurance companies and they have to pay for that.”

Insurance Companies are Losing More Money

The past year has been brutal for the auto insurance industry. According to J.D. Power’s 2023 U.S. Auto Insurance Study, “Auto insurers lost an average of 12 cents on every dollar of premium they collected in 2022 — the worst performance in more than 20 years.”

Many factors are driving up the costs insurers pay to settle car insurance claims. This includes increased rates for things like:

  • Car parts to repair vehicles
  • Labor on vehicle repairs
  • Legal fees after an at-fault accident
  • Longer periods of providing rental cars to customers as vehicle repair takes more time complete due to shortages
  • Medical expenses related to accidents (including treatments and prescriptions)
  • Replacement vehicles

Unfortunately for policyholders, one way that insurance companies offset the increased costs of claims is by raising the rates they charge you for protection. Rate increases can be spread out in different ways from company to company, so not all policyholders are hit with the same increase.

Insurers monitor trends in the auto industry year after year, which also helps them decide whose rate to increase and by how much. Consider this: Some vehicles simply cost more to repair after an accident than others. If you drive a vehicle make/model that shows a notable increase in the expenses related to repair, your premiums might increase at a greater percentage than someone whose car make/model is cheaper to fix.

Or maybe you live in a state where accident frequency and/or severity is increasing overall. There could be an increase in premiums at a statewide level that’s more significant than in other states where drivers aren’t getting into more wrecks.

Insurance Companies Reinvest Premiums Differently

Another less-discussed factor impacting policyholders is how insurance companies reinvest premiums.


“The factor no one ever talks about is that the way insurers ultimately make their money is off investments. And their investments cratered along with the rest of us experiencing what happened with the marketplace,” Clark explains.

The way an insurance company reinvests the premiums they collect varies from company to company. At any given time, individual companies may be performing better or worse than expected. But when things aren’t looking so good for a company’s investments, policyholders may pay the price.

This means — regardless of auto industry trends — your insurer might be raising policyholder rates if their investments aren’t doing so well right now. Clark advises:

“Because different insurers are having different experiences with their investment portfolios, they have had different experiences with overall claims and costs associated with those. There are bigger disparities and bigger benefits to you shopping your auto insurance.”

Not sure if you’re still getting a fair rate from your insurer? Check out our guide on how to re-shop your car insurance for a lower rate. Then, you can use our list of the best auto insurance companies to start getting quotes.

Changes To Your Driver Profile

In addition to changes in the auto insurance industry, there are some lesser-known things that you might do that cause your insurance premiums to rise. Knowing these factors is beneficial because some things — like a loss of discounts or change in credit score — can be reversible or improved upon to re-secure a lower rate.

So, here are ten changes that can cause your car insurance to go up:

1. Change of Address

When you move, many of the factors that impact your auto insurance change. For example, the mileage you drive to get to work might change along with the safety level of routes you travel regularly and the overall safety — or perceived safety — of where you keep your car most of the time.

If you move to an area that has lower rates of car accidents, car thefts/break-ins, or overall safer roads then you might be happy to see your auto insurance go down. But if you move to an area that increases your risk of property damage or has a higher frequency of accidents, then your auto insurance will likely go up.

As an example, if you move from a major city with heavy traffic to a quieter rural community then it’s more likely your rates will decrease. But if you do the opposite, then your rates will likely increase. By how much? It depends on the city you move to and the auto and traffic data from that zip code.

2. Change in Coverage

Making changes to your car insurance coverage can impact your premiums. Changes to coverage include things like:


Before you make changes, be sure to review quotes from your insurer. That way you can see how your premiums are impacted before you get a surprise bill.

3. Credit Score Change

Most states let auto insurers use your credit score as a factor to help determine your riskiness as a driver. Insurance companies claim that a lower credit score is an indication of a higher likelihood that you’ll file a claim. So, when your credit score drops there’s a chance your premiums will rise.

ValuePenguin found that “The difference between a good and poor credit score can change premiums by 80%.”

Just know you’re not alone if you think insurance should be based on your driving and claims instead of your credit and financial state of being. Clark says:

“The whole credit score thing in insurance drives me to distraction.”

While we might not be able to change how insurance companies use our credit scores immediately, we can always take steps to improve our credit scores. To get started, check out this list of ways to improve your credit score quickly.

4. Loss of Discounts

Not all discounts you receive at the beginning of your policy will last for as long as you maintain insurance. Unfortunately, sometimes discounts expire on their own. For example, some insurers offer discounts for new vehicles. Once your car reaches a certain age, it may no longer qualify.

Other times, however, drivers might do something to no longer qualify for a discount. When a policy includes a discount for good grades, you can lose this discount if grades drop for the student on your policy.

If you’re unsure about your standing with discounts, contact your insurer. There could be actions you can take to get discounts reapplied to your account. It might be as simple as completing another defensive driver course after a few years or sending in a document to confirm continued eligibility.

5. Mileage Change

Have you recently changed your driving habits? When you increase your time spent on the road, you can probably guess what insurers see increasing as well. If you said riskiness, then you’re absolutely right.

With insurance in general, anything that can be viewed as increasing your riskiness — or likelihood of sustaining property damage or injuries — can likely be used to justify a rate increase.


Typically, however, an increase in your mileage won’t make a difference on your premiums unless you’re enrolled in a pay-per-mile policy. Otherwise, your insurance company generally just gets your estimated annual mileage at the time of enrollment.

That said, what you report matters. How much? Using data from Insure.com, Experian reports the following:

• Someone who drives 10,000 miles annually will pay 4% less than someone who drives 12,000 miles.

• Driving 7,500 miles annually could reduce your premiums 10% compared with driving 10,000 miles.

• You’ll see the most savings if you drive less than 5,000 miles annually.

Source: https://www.experian.com/blogs/ask-experian/does-mileage-affect-car-insurance

6. Missed or Partial Payments

There might come a time when your car insurance bill is suddenly higher than usual, but it’s just a one-off thing. If you miss a payment, your next bill will typically be higher than usual. It should include your charge for the current month along with charges for any missed payments and late fees. This will also be the case if you make a partial payment.

Once you catch up on payments, your bill will likely go back down. That said, if you regularly miss payments then your insurer will view you as a riskier driver to insure. The riskier you are to insure, there more likely it is that your premiums will go up. Or even worse, your insurer might decide to drop you as a customer.

7. New Cars and/or Drivers

When you add another car to your policy, you should expect your premiums to increase. Let’s say you’ve got multiple cars with coverage. Even with a multi-car discount, you have more property to protect. So, a rate increase is normal.

But what if you replace an older vehicle with a newer one? In this case, a rate increase is still normal because newer cars usually cost more to repair. A new or different car also comes with different risks. Maybe your replacement vehicle is more likely to be stolen or more likely to sustain serious damage in minor collisions. Your premiums will increase to reflect calculations of how risky your vehicle is to insure.

Adding a new driver to your policy will also likely lead to a rate increase. Insurers will create a driver profile for the person you’re adding. The profile is based on data such as the driver’s age, driving history, relationship status, education level, and more. Collectively, all the factors are considered to guess how risky your new driver is to insure and your rates will rise accordingly.

8. Not-at-Fault Accidents

It’s no secret that your auto insurance will likely go up if you’re at fault for an accident. But did you know that some insurance companies will also raise your rates when you’re not at fault?

One member of Team Clark found that his auto insurance rates spiked by 15% when a neighbor who parked next to him banged up his car while leaving a parking space. He was not at fault and wasn’t even present when the damage happened! Yet his premium went up anyway.

Depending on where you live, you might be required to file a claim with your insurer even when you’re not at fault. If so, you’re amongst those who are more likely to see their premiums increase after a not-at-fault accident. In other states, however, insurance companies are not allowed to increase your rates if you’re involved in an accident that isn’t your fault.


9. Relationship Status Change

You might not think your relationship status is any of your insurance company’s business. But when it comes to your premiums, your insurer is very interested in any status updates. Why? Because insurers have determined there’s a connection between your riskiness as a driver when you’re single vs. when you’re married.

Statistically, someone who is married is less likely to file an auto claim than someone who is single, divorced or widowed. Bankrate reports that “Married couples pay an average of 6 percent less for full coverage and 4 percent less for minimum coverage.”

If you’re recently divorced or widowed, unfortunately, there’s a chance your auto insurance will go up. That said, some states have banned the use of marital status as a factor for consideration when determining insurance rates.

10. Roadside Assistance Usage

Clark has talked before about the danger of using roadside assistance from your insurance company.

Sadly, some auto insurers treat the use of their roadside assistance as an at-fault claim. This results in claims data being reported for inclusion on your C.L.U.E. report, which ultimately leads to increased premiums. What’s worse is that it also limits your ability to shop around with other insurers for lower rates since they’ll also see the ding on your report.

When it comes to the roadside assistance your insurance company offers, Clark says:

“That ‘free tow’ could be the most expensive tow you ever have.”

That doesn’t mean you should skip roadside assistance altogether. Instead, look for coverage from a third-party like AAA. Roadside assistance coverage from a third-party doesn’t get reported to any centralized insurance industry database, so it won’t impact your premiums down the line.

Final Thoughts

There are many reasons why your car insurance can go up. Generally — even when it doesn’t seem like it — there’s a reason. Sometimes, it’s because of changes you made that you were likely unaware would impact your premiums. In this case, there may be things you can do to try and get your rate back down.

But other times, the reasons are completely out of your control.

“Insurance companies are always doing this back-and-forth between fighting for market share and increasing profits. When they’re fighting for market share, they keep premiums low. But when they feel like they have enough market share, they need to make a profit. So they have to raise premiums. It’s a never-ending cycle.”

If you want to make sure you’re getting a fair rate, you can always re-shop your auto insurance. Even if you’re not ready to switch insurers, getting quotes from other companies can give you the confidence of knowing your rates align with the current market. And be sure to check out or list of ways to save on car insurance to see how else you might be able to get your rates down.


Did your car insurance go up, significantly? Join the conversation and see what others are doing about it in our Clark.com Community!