Have you ever been surprised by an increase in your insurance premium at renewal time? In this article, we’ll explain a few of the reasons why your auto or home insurance rate may have increased.
We’ve also invited BrokerLink insurance expert Tishon from our Toronto office to share his knowledge! He has some tips about what you can do to manage your insurance premium increases at renewal time.
Why do home or auto insurance premiums increase?
Everyone’s insurance policy is different. Whether it’s your home, car or business, your insurance company considers your specific risk factors to determine your rate. If your insurance premium has increased, here are a few of the most common reasons why:
You submitted a claim
One of the top reasons your insurance premium may have increased is because of a claim. For example, your car insurance premiums may increase after a claim if the accident was your fault, depending on your insurer and the situation. However, the increase can vary depending on other factors including your history (driving record), loyalty, the likelihood of whether you’ll file another claim in the future and whether you have purchased optional Accident Forgiveness coverage.
What is accident forgiveness coverage?
Accident-forgiveness coverage can keep your rates from going up if you are involved your first at-fault accident. In addition, you will maintain your good driving record, as long as you stay with the same company.
Accidents happen, and that’s what insurance is there for. But you should still do everything you can to avoid claims. Drive safely and keep your home well maintained.
You got a ticket
If you are surprised by an increase in your car insurance premium when it renewed, think back… did you get a speeding ticket? Depending on how fast you were going, speeding tickets can cause significant increases in your car insurance premium. According to the Government of Canada, 23 per cent of fatal car accidents were caused by speeding. You could also see an increase if you received a ticket for distracted driving, which is the cause of 21 per cent of fatal car accidents.
A speeding or distracted driving ticket can cause an increase in your car insurance premiums! Don’t risk it: drive the speed limit, leave your phone in the backseat and keep your eyes on the road!
Moving can impact your home and car insurance premium. Different provinces, cities and locations have different risk levels that can impact on your premium. Every area has its own risk factors, such as:
- Traffic patterns
- Access to emergency services and resources, like a fire hydrant
- Proximity to water that could cause flooding
Climate change and extreme weather
Believe it or not, climate change and extreme weather may cause your insurance premiums to increase. As events like flooding, hurricanes and forest fires increase, they cause more damage, therefore, claims increase as well. When insurance companies receive more claims, they must raise premiums to ensure they can provide coverage for everyone.
More expensive parts
New cars have more technology built into them than ever before. While they make our lives easier and our roads safer, the parts and systems are often costly to repair and replace. Sometimes the parts are specialized and the systems must be recalibrated with specific equipment, which means only specially trained mechanics can repair the damage. All this means car repair costs are increasing, which can lead to higher premiums across the board.
You know that camera at the back of your car that helps you park? It’s expensive to replace or repair. That’s why a minor accident like a fender bender can cause your premium to increase.
Other factors that can increase your insurance premium
We’ve shared some of the direct causes that could increase your insurance premium, however, there are factors outside of our control that may influence insurance premium costs indirectly, such as inflation.
Inflation is an overall rise in prices in an economy, in which the general level of prices for goods and services increases. Simply put: inflation means things get more expensive across the board, including insurance.
Is it possible to prevent an increase in insurance premiums?
There are a few things you can do to help manage increases to your insurance premiums.
Call your broker at renewal time! Your broker is your best resource when it comes to finding the savings on insurance. It’s a great idea to give them a call at least once a year to see if there are any opportunities for you to save, and to make sure you have the right coverage in place.
Other ways to save on your car and home insurance premiums:
- Avoid car insurance claims by driving safely. Observe the speed limit and keep your eyes on the road – and don’t text while you’re driving!
- New drivers should consider taking a driving course – some insurance companies offer discounts if you’ve graduated from an accredited course.
- Keep your home well maintained to avoid costly repairs and damage, which could result in claims.
- Always pay your insurance bill on time. Failure to pay your insurance bill could result in the cancellation of your policy for non-payment, which could affect your insurance premiums in the future.
- Bundle your home and auto insurance policies. This could save as much as 15 per cent off your annual premium!
Contact BrokerLink for your insurance needs
Whether you’re looking for home, auto or business insurance, BrokerLink can help. Our brokers will take the time to get to know you and create a customized plan just for you.