Why Did My Insurance Go Up?

By: Donna Craven, CPL

Donna is a licensed insurance broker who has worked in the industry for more than 28 years.

why insurance goes upLife brings us all sorts of surprises, good and bad. You may have received one recently when you opened up your renewed MA car insurance or MA home insurance policy… only to discover a higher price tag.

Why did my insurance go up? you’re probably asking—especially if you didn’t file a claim in the past year.

We get this question a lot, and unfortunately there isn’t one, easy answer. Rest assured, you aren’t being charged more just so that insurers can rake in more money (there are rules against this, actually). Many different factors go into determining your family’s insurance rates. To start with, let’s look at a few that are within your control:

Your New Car or New Home

Car insurance is based on the cost of replacing your vehicle if it’s ever totaled or stolen. Naturally, when you swap out your current car for a newer or fancier model, the cost to replace your vehicle is going to go up. Expect your premium to rise, too.

The same principle holds true on the home insurance front, if you move into a new residence or remodel a significant area of your home. What would it cost to rebuild that residence, based on current prices for labor and materials? (By the way, the answer may be a lot higher than the home’s market value.)

A bigger house may be pricier to insure. On the other hand, a newer house (with newer pipes, wiring, and roofing), may present fewer risks… and actually help to lower your current rate. Factors like the home’s age, building materials, and structural features (e.g. fireplaces, swimming pools) go into carrier rate formulas. So if you’re getting ready to relocate or remodel, call your insurance agent—508.339.2951—to discuss how your insurance rate and coverage needs might be affected.

Your Address

Believe it or not, your home address can make a major difference in the cost of your car insurance. According to Value Penguin, the average annual premium for car insurance in Massachusetts is $529. But depending on exactly where you live, you could be paying nearly twice as much. So if you move to a city like Brockton, Revere, Lynn, Springfield, or certain neighborhoods within Boston’s city range (e.g. Dorchester or Roxbury), you could see a spike.

In case you’re wondering how specific hometowns fare, car insurance in Mansfield, North Attleboro and Foxborough generally costs 0 to 1 percent below the state average.

When it comes to home insurance, even if your family is staying put, you still might see an annual rate increase based on trends happening in your neighborhood. If reports of burglary, fires, or certain weather-based claims went up significantly in the past twelve months, you may see those numbers reflected in your next year’s home insurance premium.

Household Members (New Drivers and New Pets)

Adding new drivers to your policy can be pretty expensive—especially new, teenage drivers. According to sources cited by The New York Times, a teenage driver in Massachusetts could increase his family’s premium by 63 percent. In Rhode Island, on average, a family’s rate more than doubles! If you’re preparing to add a new driver to your policy, get in touch with your agent to review your options and potential insurance discounts.

New household members can affect your home or MA renters’ insurance rate, too—namely: dogs. According to the MSPCA, insurance companies pay an estimated $250 million a year in dog bite claims, with an average cost per claim of $12,000. Unfortunately for dog-loving families, this is why some insurance companies will raise your rate or even deny coverage if you welcome certain breeds into your home/apartment.

Our recommendation? Call your agent before you adopt, to review your carrier’s terms. Even if the breed you’re considering is on a so-called “blacklist,” there may be ways to circumvent the policy (e.g. outlining your pet’s history of training, getting a letter from your vet, scheduling a “meet and greet” with a representative from the insurance company). FYI: If you acquire a pet midway through your current term, you may be required to inform your insurance company; ask your agent to be sure.

Your Driving Record

Never been in an accident? Don’t assume your car insurer thinks you’re an A+ driver. In Massachusetts, the DMV has a point system known as the Safe Driver Insurance Plan (SDIP). SDIP assigns “points” to drivers involved in surchargable events: moving violations or at-fault accidents. Lots of moving violations, major violations, and frequent violations will earn you extra points. The more points you have, the higher your car insurance rates will be. Keep in mind: any traffic tickets you receive out of state will also be added to your record, and count toward your total number of surchargeable events.

Your Recent Claims

If you’re involved in an accident—even if you weren’t at fault—your insurance rates may go up afterward. Some carriers automatically increase your premium after a claim of any kind/amount. Others may allow you to maintain your current rate if you have a history of safe driving, if you weren’t at fault, or if you have accident forgiveness. The good news is that heightened premiums usually don’t last forever; you may see yours go back down again after a year or two of reestablishing a good driving record. In the meantime, you could also call your MA insurance agency to check for more competitive rates.

Property claims work the same way, because insurers have formulas that tell them past claims are a good indicator of future claims. If you want a clear view of your claims history—for auto losses and/or property losses—you can request a free report here.

Changes You Made to Your Policy

Obviously, any changes made to your policy terms will affect your rate (e.g. adjusting your deductible, adding more coverage or new endorsements/riders). We recommend checking in with your insurance agent at least once a year to discuss your family’s evolving coverage needs.

If nothing has changed in your life, here are some external factors that may explain why your rates have gone up:

  • The overall number of claims and accidents is on the rise, which means insurers are seeing profit margins shrink. Experts say rate hikes will level off if and when the economics of insuring car owners improves.
  • The average cost of claims is also on the rise, for a variety of reasons—including the fact that today’s cars cost more to repair (thanks to high-tech features and modern materials), today’s drivers are involved in increasingly severe accidents (i.e. fatal crashes), and rising healthcare costs.
  • Severe weather (hurricanes, floods, etc.) means insurance companies are paying out more than they used to—both for home insurance and comprehensive auto insurance claims.

Again, insurance is more complicated than the 10-minute quote commercials would like you to believe. There’s a real benefit to getting on the phone with someone who can listen to your situation, and shop quotes—from different carriers—on your behalf. If you’re concerned about your insurance going up, don’t hesitate to call our team at 508.339.2951.