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Why Do Car Insurance Premiums Increase Every Year?

Man sitting on sofa learning about why car insurance premiums increase

If the price you pay for car insurance goes up every year, or even every six months, you’re not alone. Even when you haven’t made any claims or logged any traffic violations, there’s a good likelihood that you are seeing at least a slight increase each year. So why do car insurance premiums go up every year?

Even seemingly small changes in some of your individual risk factors can potentially result in a higher premium. But as you might have guessed, it’s not always your individual behavior that triggers a premium increase.

In order to be able to pay claims, insurers need to collect, on average, about as much premium as they pay out for losses and expenses. It’s often the case that the expenses associated with paying claims have risen generally across the state.

Think of expenses that tend to trend upward in all parts of the economy, like health care, salaries and other costs of living. Inflation is another major factor that affects these expenses. These higher expenses are offset with premium increases that affect most, if not all drivers.

Reasons for Premium Increases

Let’s look at reasons why your car insurance premium may increase over the years. These may include having filed a new claim or having had a traffic violation added to your driving history, adding or changing a vehicle, adding or changing a driver and increasing the amount of your coverage. Of course, if you have multiple drivers on your policy, the potential for annual increases multiplies.

Adding vehicles, drivers and coverage

If you add a vehicle there is something additional to insure, so your price will go up. Even if you’re just switching from one vehicle to a different make, model or year, your price may go up if your insurance company thinks the new vehicle itself is not as safe or is more expensive to fix. Similarly, adding or changing a driver may increase the price you pay.

Lastly, if you decide to increase your coverage limits, add optional coverages or reduce the deductibles on your policy, then your price will go up. 

Driving Record: Points and Accidents

Your driving record indicates how risky you are to insure. It may consist of traffic violations, accident history and claims history. Safe driving is important to maintaining a lower premium and preventing accidents before they happen.

Points reflect your driving record and are often considered by some insurance companies for your rates.  While some insurance companies may not directly use points, the violations that incurred those points will typically result in higher rates.

Find out more about your state’s point system to see what violations could impact your premiums.

New Hampshire
New Jersey
New York

Unsurprisingly, auto accidents will increase your insurance costs. An accident where you were at fault is likely to raise your premium, but even accidents where you weren’t at fault can result in a price increase, depending on your company’s rating plan. Optional coverage like our Accident Forgiveness can waive surcharges after an accident.


Filing a claim can also increase your premium. How much it increases depends on what kind of claim you file. For example, a comprehensive claim will typically result in a smaller increase than a collision claim.

These are associated statistically with increased risk exposure. Except in the cases of very minor claims (usually less than $1,000 depending on your state and insurance company) and minor traffic violations like a broken tail light, any new claim or traffic violation is likely to make you appear riskier.

Rate Level Changes

Another very common reason for a premium increase comes in the form of what is called a rate level increase. Rate level increases often come about because of trends in the industry towards more expensive vehicle repair and medical costs.

Repairs and medical costs are almost always on the rise, so overall rate decreases are a very rare occurrence. At Plymouth Rock Assurance, we do our best to keep those costs down on behalf of our customers.

As you can see, there are some obvious and some not-so-obvious reasons for the price of your car insurance to go up every year. Whatever the reason, you can be sure that not all insurance companies will charge the same amount for the same coverage.

That’s why it’s important to shop around for a better price if you feel your insurance premium has increased too much. Annual increases are typical across the industry, but the way your risk factors are viewed by a particular company may vary.

Get to understand your coverage and  discounts to ensure you are getting the best price for the assurance you need. 

Call 855-993-4470, get your free quote online or find a local agent to see how Plymouth Rock Assurance can help you.