Many different factors go into auto insurance rates. Some are affecting everyone’s rates, like repair costs, and others are more individual factors, like accidents and violations. Why exactly are auto insurance rates increasing? In this article, we’re going to break down the factors affecting your car insurance premium. Common Factors Contributing to Higher Auto Insurance RatesYou don’t have to do much research to know that the costs of most goods and services have gone up. It should be no surprise then that auto insurance claims are also increasing. In fact, the total cost for claims has increased — since 2019, liability claims have increased by 35% (claims where you have caused damage or injury to another vehicle or person) and collision claims by 40% (claims where your own vehicle has damage due to a collision). The increasing severity and frequency of claims is caused by many factors. Vehicle costsWe are buying more expensive cars, whether it’s a fully loaded truck, an SUV with advanced safety features or an electric vehicle. The average cost of a new car in 2023 was more than $46,000, according to Consumer Reports, and used cars are also more expensive than ever. This translates to higher costs for insurance companies when they have to replace a vehicle.Repair Costs and TimeCosts for car repairs jumped about 20% from 2022 to 2023. The reasons for cost increases are numerous — some may be temporary changes due to supply chain issues that have persisted for a few years now, but other reasons are probably here to stay. Some of the reasons for increasing auto repair costs include:Sophisticated, technology-enabled vehicles. Sensors for advanced systems are located in bumpers, fenders, grills and other parts of vehicles that are often damaged in accidents. Complex systems can mean complex equipment to fix them, and precise repairs that take longer to complete.Cost of vehicle parts. Like many products, when supply is low, prices increase, and that’s been the case for car parts for the last several years.Labor costs and labor shortages. The pool of auto technicians is shrinking as older workers age out of their jobs and not enough younger workers are entering the profession. Wages have increased with the need to attract more skilled workers who can work with more advanced technology. Worker shortages also lead to longer repair times.The longer it takes to repair a vehicle, the more expensive a claim can get due to increased labor costs or more car rental days (subject to policy limits).Crashes and FatalitiesDespite safety advances, crashes and fatalities have increased in the past few years. We are speeding and driving under the influence more often. And even if you’re the most careful driver, reckless drivers can affect your car insurance rates because they increase the likelihood that you’ll be in a collision with another vehicle. We’re also driving bigger, heavier vehicles. While they may keep their occupants safer, bigger vehicles can cause more damage to other vehicles and people if they’re involved in an accident.Medical CostsAuto insurance helps pay for medical costs caused by accidents. Those costs have also increased, both because medical treatment is more expensive and also because more severe accidents can mean more costly medical treatment is necessary. Weather EventsChanges in weather patterns have led to longer, more intense rainstorms. Longer hail seasons with the potential for larger hail are becoming the norm in some parts of the country. These bouts of extreme weather can increase collision and comprehensive claims. Uninsured DriversAccording to the Insurance Research Council, in 2022 nearly 1 in 7 drivers in the U.S. were uninsured. In accidents where a driver doesn’t have insurance (or doesn’t have enough), your uninsured/underinsured motorist coverage would kick in to help pay damage or medical expenses. Factors That Lead to Auto Insurance Rate Increases for IndividualsOf course, many factors that affect vehicle insurance premiums are based on your specific details. Some of them are things you can change; some of them you can’t. Let’s walk through those factors. Your Accident and Claims HistoryStatistics show that a driver that’s been in one accident is more likely to be in another — even for not-at-fault accidents. Because it’s such a strong predictor of risk, auto insurers look at accident and claims history closely when determining your insurance rate. Discover how accidents affect your car insurance premium.Your Driving Record Recent tickets and violations are a strong predictor of the potential that you may have a future claim. So it makes sense that they can affect how much you’re charged for auto insurance. And some tickets, like reckless driving or driving under the influence (DUI), can have a bigger impact than others. Tickets and violations could stay on your record — and affect your insurance rates — for a number of years. TIP: You can’t change your past driving record, but you can change your driving habits to help lower your rates in the future. In the long run, driving carefully can save you money on your rates and, more importantly, could prevent a serious accident. Your VehicleWhen you think about a car that costs more to insure, a souped-up sports car or premium electric vehicle may come to mind. And it’s true that those vehicles may cost more to insure. But the age, make, model and trim package can affect your car insurance rates. Newer vehicles cost more to replace; large trucks cause more damage in accidents and some car makes and models are more likely to be stolen. Insurers consider these factors and more when determining insurance rates. Your LocationWhere you live affects your insurance rates. An insurance company will look at accidents in your area, population density, the crime rate, and weather conditions, among other things. Where you park your car when you’re not using it also affects your rates. Got a garage that protects your car from theft and hail? That will be accounted for in your rate. Even the state you live in can affect your rates. Rules that govern insurance vary from state to state. For instance, one state may require personal injury protection (which costs more for insurance companies) while another one doesn’t. And certain states may be more prone to lawsuits or fraud.Your Credit InformationInsurers predictive models have shown a correlation between some aspects of your credit and your insurance risk. In most states, they’re allowed to use certain aspects of your credit history, called an insurance score, when they rate your policy. Personal CharacteristicsAuto insurers also use certain personal characteristics in their risk assessments. For example, if there’s a new driver on your policy, their rate may be higher than a driver with more experience, all other things being equal. What Can You Do to Reduce Your Car Insurance Rates? Some factors related to your insurance rates, like your date of birth, are unchangeable. Others, like where you live and the car you drive, are major life decisions. But you still have some control over your rates. Here are some considerations: Practice Driving SafelyThe best way to keep your car insurance rates low is by not getting into an accident. Follow the rules of the road, like speed limits and traffic signals.Avoid distractions while driving, like your phone, food, and other activities that take your focus off the road.Take a defensive driving course. It could earn you a discount (or help you avoid accidents).Keep your vehicle in good working order.Make smart choices. Consider postponing car trips when the weather is bad. Try to run errands when it’s light out (night driving is inherently more dangerous).Learn more safe driving tips.Adjust Your DeductibleYou might like the idea of a lower deductible so you don’t have to pay as much in the event of a covered loss. But that lower deductible means a higher premium. If you know you won’t have trouble paying the deductible if an accident occurs, call your insurer and ask for a higher one. Ask About Car Insurance DiscountsDiscounts are a way to help encourage policyholders to drive safely. CONNECT’s Premier Safety discount is for households where all drivers have spotless records. Other discounts may also help you save money on your car insurance. One discount that can save you money is a multi-product discount for bundling your auto policy with a home policy. The Bottom LineAll insurance companies are obligated to pay claims when their customers suffer covered losses. And if paying claims costs more, rates need to be adjusted to meet those obligations.Of course, no one likes to see car insurance rate hikes with their renewal, and it often leads to shopping around. If you decide to get a quote from other carriers, just be sure you’re comparing apples-to-apples, taking into account policy components, like coverages, limits, exclusions. In the end, while car insurance rate increases may be unavoidable, customer service is an important factor to consider if you’re thinking about changing insurance. At CONNECT, we’ve always been focused on delivering Handle With Care® service when it matters most, and that continues to be our priority today. Find additional resources about car insurance rates in our Learning Center.Calculate Insurance Rates | CONNECT auto insurance (connectbyamfam.com)Shopping for Car Insurance | CONNECT auto insurance (connectbyamfam.com)Understanding Insurance Terms | CONNECT auto & home insurance (connectbyamfam.com)