Car insurance: Why does my premium go up sometimes?
It’s time to renew your car insurance. Surprise! Your premium has increased. There are many possible reasons: Here are eight.
REASON # 1 – YOUR POLICY HAS A REPLACEMENT VALUE ENDORSEMENT
Replacement value endorsements, for policies that have them, are one of the main reasons car insurance premiums go up. The older a vehicle gets, the more it depreciates, and the more the costs associated with a replacement value endorsement increase!
REASON # 2 – THERE’S A SMALL BLEMISH ON YOUR FILE
If there have been any changes to your driving record or claims file, there’s a good possibility your insurance premium will increase. Being involved in a car accident or getting a traffic ticket, for example, can count against you and cause your premium to go up come renewal time.
If you’re at fault in an accident and make a claim to your insurer, you should also expect your premium to go up. Even if you cover the costs of the accident, it will be recorded in the Automobile Claims Database, which can be viewed by any company that offers vehicle insurance. That’s why it’s a good idea to report all accidents to your insurer, even if you don’t make a claim, in order to give them your side of the story and allow them to make an honest and fair assessment of your degree of responsibility.
REASON # 3 – A PROMOTION HAS COME TO AN END
You may have benefited from a special promotional price on your car insurance that is no longer available when you renew.
REASON # 4 –YOU'VE ACQUIRED YOUR DREAM CAR
Did you just buy the car of your dreams? Congratulations! Now, about the bill… The kind of vehicle you have has an influence on the insurance premium when you renew. Insurers look at the make, year, and model of the car, since these can affect the level of risk involved in insuring the vehicle.
Using your vehicle more frequently can also trigger a rise in your premium. The more you drive, the more you increase the possibility of being involved in a motor vehicle accident. Something to think about!
REASON # 5 – YOU’VE MOVED
Your insurance premium varies depending on your area of residence. The number of claims or car thefts in your neighborhood is taken into account when you renew.
REASON # 6 – A BAD CREDIT RATING
Financial stability and a good credit record can qualify you for significant discounts when you renew.
REASON # 7 – YOUR TEENAGER JUST GOT HIS OR HER LICENSE (HURRAY!)
Your child has just earned his or her license and wants to borrow the car? Adding a young adult as an occasional (or principal) driver when you renew your insurance will increase your premium. But it also means that your whole family will be safely and adequately covered in case of an accident.
REASON # 8 – CAR INSURANCE TAXES HAVE INCREASED
That’s right! In its economic update, the Quebec government raised the auto insurance premium sales tax (TPA) from 5% to 9% as of January 1, 2015. This tax increase also applies to rolling stock such as snow plows, tractors, and snow blowers. For more information, read the press releases from the Insurance Bureau of Canada and Revenue Quebec.
WATCH FOR DISCOUNTS
Are you a longstanding client? Is your car equipped with an antitheft device? Do you want to insure your car and house with the same insurer? All of these factors can earn you discounts when you renew your car insurance. Don’t be shy about asking your insurer questions come renewal time!
