You are probably wondering why your car insurance has suddenly gone up. Well, you’re not alone; many motorists in Canada are asking the same question, even those with a spotless driving history. As insurance companies in Canada raise prices, exasperated clients are seeking to know why.
To give you some clarity, here are nine explanations on why your car insurance go up for no reason:
1. At-Fault Car Accidents
Should you be involved in a car accident where you are at fault, and the other party or you makes an insurance claim, your insurance history will be negatively affected. As a result, your insurance payments are likely to go up unless your policy has an “accident forgiveness” clause.
If you have never made an insurance claim for an at-fault collision, and you’ve been driving safely for several years, insurance companies will reward you with lower premiums. So, should your premiums go up due to an accident, don’t worry, keep driving safely for several years. A good driving record will be reflected by your auto insurance, so your premiums should go down with time.
2. Traffic Violations
Traffic violations is another possible reason on why your car insurance go up for no reason. To keep your car insurance premiums low, avoid DUI, distracted driving, speeding tickets, and other traffic violations. The severity of the offence determines how high your premiums will rise. For instance, if your speeding ticket is for driving below 10km/hour above the speed limit, your premiums will only be marginally affected.
On the other, DUI of cannabis or alcohol will attract higher penalties. If the offences are substantial, the insurance company may decide to cancel your policy, a process known as “getting off risk,” and put you under the “high risk” category that attracts prohibitive auto insurance!
3. Suspended Driver’s License
If you commit a traffic violation that results in the suspension of your driver’s license, your insurance premiums will go up. Examples of violations likely to get your license suspended include impaired driving and other traffic offences that are considered serious. However, your insurance payments are unlikely to be affected if the suspension was a result of a medical condition or perhaps you forgot to renew your license.
4. Missed Insurance Payments
Your insurance record is adversely affected by cancellations and missed payments. In case you missed paying your insurance premiums in a year, a majority of insurance companies will demand that you pay the insurance premium in full. Should your policy lapse due to non-payment, there’s a high chance that your insurance company won’t agree to a new policy, forcing you to hunt for a high-risk auto insurance package, which doesn’t come cheap.
5. Vehicle Modifications and Upgrades
It might be tempting to want to add fancy gadgets and modern features to make your car fun, safe and convenient. However, before you do it, consider the fact that such modifications will make your car more expensive to repair and, consequently, to insure. Before you add blind-spot monitoring, lane departure warnings, smartphone connectivity, backup cameras, sensors, and adaptive cruise control, consider the cost implications.
On the other hand, if you back up and hit a car like this one, be prepared to pay a couple of thousand dollars in repairs. While the wise thing to do is to let your insurance company pay for the repairs, your insurance payments are likely to go up as a result.
6. Medical Services Fraud
Many Canadians have fallen prey to medical services fraud after a car accident. Medical services fraud, in this case, means exorbitant charges for medical services, bills for medical procedures that are not covered by the policy, or billing for unnecessary medical procedures. Fraud increases everyone’s premium costs.
Medical services fraud was in 2019 cited as a top priority by the Insurance Bureau of Canada. Several enforcement strategies are being sought to arrest the problem.
7. Severe Weather Patterns
A climate change report by the Canadian Government has revealed that the country’s climate is warming at double the rate of the global average. The result is that Canada experiences severe flooding induced by heavy rains, extremely hot and long summer heat waves that result in ruinous wildfires, among other severe weather occurrences.
Consequently, insurance companies have incurred above-average insured losses. As claims for insurance climb, the insurance companies are responding by raising the cost of insurance.
8. Car Insurance Fraud
Every year, Canadians pay above $2 billion in the form of insurance fraud. A report by Aviva Canada has found that most claims for car damages, nine out of ten, involve one form of insurance fraud or another. The annoying thing is that insurance fraud can occur without you knowing and at no fault on your part. However, should your claim be exposed to car insurance fraud, you may have to seek high-risk auto insurance if your insurer decides to cancel your policy.
9. Location-Specific Hazards
If you live in an area where your car is more likely to get stolen, broken into or get damaged by the elements, you will soon see your rates go up. Other conditions that could raise your insurance premiums include the frequency of road accidents in your area and exposure to traffic. Therefore, if the data analytics system determines that your area is becoming riskier, your insurance payments could go up as a result. While this is something beyond your control, it is what it is.
There are many reasons your car insurance payments might go up. Some of these are beyond your control while others are avoidable. The key is to always drive safely. Also, avoid late or missed payments as this could drive your premiums up.