Over the years, you have probably noticed your car insurance premium slowly increase with each renewal. This has probably left you wondering what reasons could possibly be leading to this hike up and whether there is anything you can do about it.
The factors that raise your car insurance premiums are many and may vary between motorists. While some are within your control, others are not. To help you get a better understanding, here are 5 reasons why your car insurance premium increases.
You are at fault for a road mishap
If you are involved in an accident and found to be at fault, you might see the premium on your car insurance go up. This increase in premium usually follows an at-fault claim as you prove to be a risky customer for the insurance provider. In the unfortunate event that this occurs, you need to try your best to maintain a spotless record in the years to come to prevent additional sharp spikes in insurance costs with every renewal.
Your vehicle parts have moved out of warranty
When your car is brand new, its parts enjoy a manufacturer’s warranty for a certain period. However, as your vehicle ages, these parts slowly move out of their default coverage. This indicates an added liability for the insurance provider if a claim is raised. They may, therefore, compensate for this risk by increasing your monthly car insurance premium.
The area you live in has increased cases of vehicle theft
Most people are unaware of the fact that their postal code can determine their insurance rates. For instance, a premium hike may happen if your insurance company notes higher occurrences of car theft in a particular area. Such a trend would make all insured parties living in that area high-risk customers. The coverage provider would most definitely hike its premium rates expecting a lot more claims if the current trend persists.
The IRDAI has revised its rates
The IRDAI (Insurance Regulatory and Development Authority of India) oversees and regulates the insurance industry in the country. Should the IRDAI revise and hike premium rates for third-part liability cove, you will see this change reflected in your car insurance cost.
Your credit score is low
The practice of checking a customer’s credit score is not followed by all insurance companies in India. That being said, there are providers who give those figures a due amount of consideration. Customers with a bad credit score might see their premium rates go high. Do ask your insurance provider whether they check your credit score when your car insurance is due for renewal.
This is an overview of the general reasons why a car insurance policy might suddenly have a hike in its premium costs. While some factors – such as IRDAI revisions on rates and increased incidents of theft – are beyond your control, other reasons – such as a low credit score and at-fault road mishaps – are in your hands. So, it is advisable to work on maintaining a good record with regards to the factors that you can control so that the increase in premium is not too steep. Drive safe!