Why Your Car Insurance Premium Increases Year to Year

Car insurance goes up for reasons tied to your driving record, your car, where you live, and how the insurance company's costs have changed

Your premium rises when the insurance company sees you as a higher risk than before. That can happen because you had an accident or ticket, because you turned a certain age, because your car is now worth less (which changes how much it costs to repair), because your neighborhood had more claims, or because the company's own costs went up across the board. Some increases are about you. Some are about everything around you.

The single biggest reason premiums jump is a claim or ticket on your record. An at-fault accident or moving violation tells the company you are more likely to file another claim, so they raise your rate to cover that risk. But you can also see increases with no change in your driving at all — your age, your car's age, inflation in repair costs, and regional weather patterns all push rates up.

Key Takeaways

• At-fault accidents and moving violations are the most common reason for rate increases, and they typically stay on your record for three to five years.
• Turning 25, 65, or 70 can lower your rate, but turning 16 or 19 raises it sharply because young drivers file more claims.
• As your car ages, the cost to repair it may drop, but if it becomes less safe or more prone to theft, your rate can still go up.
• Insurance companies raise rates across entire regions when claims in that area increase, even if you personally had no accidents.
• Inflation in labor and parts costs pushes rates up every year for nearly all drivers, regardless of their history.

How accidents and tickets affect your rate

An at-fault accident is the fastest way to see a rate increase. The company paid money to fix the other car or cover injuries, so they recoup that by raising your premium. The increase typically lasts three to five years, though some companies keep it longer. A minor fender-bender might raise your rate 15 to 25 percent; a major accident with injuries can double it.

Moving violations — speeding, running a red light, reckless driving — signal that you break traffic laws, which correlates with filing claims. A single speeding ticket might raise your rate 10 to 15 percent. Multiple tickets in a short time can raise it much more. Like accidents, violations age off your record, but the timeline varies by state and company. Some states remove violations after three years; others keep them seven.

Not all tickets count the same. A parking ticket does not affect your rate. A ticket for an equipment violation (broken taillight) usually does not either. But anything that involves moving the car — speeding, failure to yield, following too closely — counts as a moving violation and goes into the calculation.

Why your age changes what you pay

Insurance rates are highest for drivers under 25 and over 70 because both groups file more claims per mile driven. A 16-year-old pays roughly three times what a 40-year-old pays for the same car and coverage. That rate drops steeply at 25, drops again at 30, and stays relatively flat until around 65.

After 65, rates begin climbing again. At 70 and beyond, they rise sharply. Older drivers have slower reaction times and are more likely to be injured in a crash, which increases claim costs. Some companies offer discounts for defensive driving courses or low mileage if you are over 55 or 65, which can offset part of the increase.

If you are in a high-rate age group — under 25 or over 70 — you will see your premium drop or rise straightforward because you age, independent of anything you do on the road. This is one of the few increases you cannot control through your own behavior.

How your car's age and type affect your premium

A brand-new car costs more to insure than an older one because repairs are expensive and parts are specialized. As your car ages, the cost to repair it drops, so your collision and comprehensive coverage become cheaper. But at some point — usually around 10 to 15 years — the savings reverse. An old car may be worth so little that collision coverage is not worth the premium, but liability coverage (which pays for damage you cause to others) stays the same or rises if the car is less safe.

The type of car matters more than age. A sports car costs more to insure than a sedan because it is involved in more accidents and theft. A truck with a high safety rating costs less than a sedan with a poor rating. If you replace your car with a model that has more accidents or theft in its category, your rate goes up even if the new car is newer.

Some older cars become harder to insure as they age because repair shops charge more to work on them or parts become scarce. A 20-year-old luxury car can cost more to insure than a 10-year-old mainstream sedan for this reason.

Regional and market-wide rate increases

Insurance companies raise rates for entire regions when claims in that area increase. If your city had a bad winter with more accidents, or if theft rose in your neighborhood, the company raises rates for all drivers there, not just those who filed claims. You see this increase even if you had a perfect driving record.

Similarly, companies raise rates across the board when their costs go up. If repair labor costs rise 8 percent nationally, or if medical costs for accident injuries increase, the company passes that on through higher premiums. This happens every year for most drivers. It is not tied to your driving at all — it is inflation in the insurance business itself.

Natural disasters also trigger regional increases. After a hurricane, flood, or hailstorm, comprehensive claims spike, and companies raise rates in that area for months or years afterward. If you live in a region prone to severe weather, you will see regular increases tied to that risk.

How much rates typically increase

The size of an increase depends on what caused it. An at-fault accident can raise your rate 15 to 40 percent, depending on severity and your company. A speeding ticket might raise it 10 to 15 percent. A DUI can raise it 50 percent or more and last seven to ten years.

Annual increases for drivers with clean records range from 3 to 10 percent per year, driven mostly by inflation and regional claims trends. Some years your rate stays flat; other years it jumps 5 to 8 percent with no change in your driving.

Rates vary widely by company, so a 20 percent increase at one insurer might be a 12 percent increase at another for the same driver and car. This is why shopping around every two to three years can save money — a company that raised you 20 percent might have a competitor offering the same coverage for less.

What you can do about rate increases

If you had an accident or ticket, the increase is locked in until that event ages off your record. You cannot dispute it. But you can reduce other parts of your premium: raise your deductible, drop collision or comprehensive coverage on an older car, ask about discounts for bundling home and auto, or take a defensive driving course (which some companies discount 5 to 10 percent).

If your rate jumped with no accident or ticket, call your company and ask why. Sometimes they made an error in your record, or they applied a discount you did not know about. If the increase is tied to regional claims or inflation, you cannot change it with that company, but you can shop other insurers. Rates vary enough that a company charging you 20 percent more than average will have competitors charging 20 percent less.

If you are over 55 or 65, ask about senior discounts or low-mileage discounts. If you are under 25, ask about good-student discounts (usually 3 to 5 percent if you maintain a B average) or discounts for completing a defensive driving course. These do not eliminate increases, but they reduce them.

Frequently Asked Questions

How long does an accident stay on my insurance record?

Most companies keep accidents on your record for three to five years. Some keep them longer. The increase to your premium usually lasts the full time the accident is on file, though the percentage increase may shrink after the first year or two. After it ages off, your rate should drop back toward what it was before.

Can I get a discount if I have not had an accident in several years?

Some companies offer a loyalty discount or a safe-driver discount after a certain number of years without a claim. These are usually 5 to 10 percent. Ask your company directly whether you may have access to. If you do not, it may be worth shopping other insurers, since some offer better discounts for clean records than others.

Why did my rate go up if I did not have an accident?

The most common reasons are inflation in repair costs, an increase in claims in your region, or a change in your age bracket. Some companies also raise rates when you renew if they have not raised them in a few years. Call your company and ask them to explain the increase — they are required to tell you the reason.

Does my credit score affect my insurance rate?

Yes. Most insurance companies use credit-based insurance scores (different from credit scores used for loans) to set rates. A lower score can raise your premium 10 to 50 percent depending on the company. Paying bills on time and reducing debt can improve your score and lower your rate over time.

Will my rate go down if I switch to a different company?

Possibly. Rates vary widely between companies for the same driver and car. If your current company raised you significantly, a competitor may offer lower rates. However, if you have a recent accident or ticket, most companies will charge you more, so the savings may be smaller than you expect. It is worth getting quotes from at least three companies before renewing.