A: Every time my car insurance policy renews it seems like it goes up and when I call and ask why I am told that the company has had a premium rate increase. Why do they need to keep having rate increases?

Q: Just like with any other business, increasing the price of a product is done to keep a company in business. In insurance, they may have to raise your premium because the wages in your state increased, which increased their cost to do business.  They could also need to increase your rate because there was a disaster where they paid out a large amount on claims that were filed in your area. A rate increase could also happen because an insurance company wasn’t charging enough for insurance coverage to cover the number of claims that were filed over the course of the year. There are any number of reasons for why an insurance company has rate increases.

Insurance companies, however, are not allowed to just increase your premium at random though. Every car insurance premium rate increase you may see has to be approved by the state you live in.

Q: I used to pay the same amount each month for my car insurance bill and all of the sudden it has gone up and I don’t understand why.

A: First, read the breakdown in your bill very carefully. Your car insurance bill should include the balance you still owed on your policy before payment last month, last month’s payment, any changes to your policy premium and finally the current balance.

The changes to your premium, if there are any, will be the easiest way to learn why your monthly bill increased. These changes could be additional premium being added because your policy renewed or any changes that were made to the coverage of your current policy. If there are no changes showing on the bill, then it’s time to talk to your agent about your car insurance bill.

Q: Why does my credit score have anything to do with my car insurance premium?

A: When insurance companies started using credit scores as one of their rating factors there was a huge outrage as people did not understand how their credit score had anything to do with how safe of a driver they were. And honestly, credit score has nothing to do with how safe of a driver you are.

However, that’s not why insurance companies use that as a factor in your premium, you can thank all of the people that have successfully and unsuccessfully filed fraudulent claims in the past. They use your credit score as an indication as to whether or not you are likely to try and commit insurance fraud because you need the money. Insurance companies have stated that they have data that backs their claim that people with lower credit scores are more likely to commit insurance fraud.

With that being said though, some states are working to overturn this rating practice and we will see what happens in the future.

Q: My car insurance agent said that I can add roadside assistance to my car insurance policy, but I already have AAA. Which one is better?

A: Actually the best thing to do is to ask your insurance agent for the details in writing of what is covered in the roadside assistance that is offered as an option on your insurance policy. Then compare what is offered there to what you have on your  AAA roadside assistance.

Each insurance company offers different roadside assistance packages so it is different from one company to the next. There are even different levels of the packages within the same company. So get the details of what is being offered on your specific company’s car and do a comparison.

Q: I just got my car insurance renewal and my premium went up, but I have had no claims or tickets. Why did it go up?

A: If you have not had any claims or tickets, your car insurance most likely went up because the company had a state-approved rate increase since you last renewal. Increases can also be because the safety and claims data for your vehicle has been updated, this can happen on any year vehicle but more often on current or next year vehicles.

Your credit score can also have an affect on your car insurance premium.

If you have seen a recent increase in your premium, talk to your insurance agent to find out why. If you are unhappy with the answer you can always have your car insurance agent get you quotes from other companies to see if they cant find you a better rate.