When Can an Insurance Company Raise Your Rates?

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Insurance, no matter what kind, can be one of the most expensive purchases you make on an annual basis. Insurance protects you in case of an accident, and while some types of insurance can be required, others are not. A common gripe about insurance is the often rising costs of having coverage. There are a number of reasons why an insurance company can raise your rates.

Auto Insurance

Auto insurers can raise your rates when you buy a new car, because it is more valuable than your previous vehicle. If you move to a new larger city where the risk of being involved in a collision is higher, or if you are involved in a collision, your auto insurer may raise your rates. If you receive a traffic ticket for speeding or are convicted of impaired driving, both of which put you at a greater risk to harm yourself and others, you'll typically see a rate increase. Auto insurance is compulsory in the United States if you own and drive a vehicle.

Life Insurance

Life insurance is optional and available to just about anyone. However, your age will play a factor in how much you pay. The older you get, the closer you reach the average life expectancy and the likelier the chance will be that you will die. After you die, your life insurance will be paid out to your beneficiaries. As it becomes likelier that you will die and and payment will have to be made, your rates go up. Economic conditions can also play a role for term life insurance rates as it did during the Great Recession when investors became wary of lending money at low rates as insurance companies, to cover a policy, must put up a large amount of capital.

Health Insurance

If you are a young, healthy person, your health insurance rates will be low because the chances of you needing to make a claim are low. That changes as you get older and you become at risk for developing conditions that can require regular medical attention. The passage of health care reform laws in 2009 has also resulted in some people paying more for health insurance premiums.

Home Insurance

Home insurance can increase through no fault of your own. You may have been living in the same house for decades and rates continue to rise. One reason could be the rise in your property value -- as your home becomes more valuable, the cost to make repairs goes up. Another can be if you live in an older area with older infrastructure, such as water lines that can burst and end up flooding your home. If you live in a dangerous neighborhood, insurance companies can raise your rates because of threats such as burglaries or vandalism.


About the Author

Ad Mal has been a professional journalist for over nine years, working at various community and specialized trade publications in reporting and managerial editing roles, and in television and radio in both on-air and behind-the-scenes roles. He has covered all levels of sports and politics, local news, crime, and business and finance. He graduated with honors from Seneca College's Broadcast Journalism Program.

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  • yellow car, a Honda Japanese sport car model image by alma_sacra from Fotolia.com