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First, we all need to agree that Insurance Companies are in the business of making profits. In order to do so, they must generate enough premium to cover their possible losses due to claims filed by their policyholders. So, understanding what makes your insurance premiums spike, it helps you to understand the basic nature of auto insurance: Insurers make money when they insure drivers who don't have accidents, and don't make claims. They lose money when the opposite happens. As such, it is in the insurer's best interest to predict driver risk factors as accurately as possible. When any of the following factors are present in your life, they indicate an increased likelihood that you, as a potential auto insurance policyholder, may have an insurance claim that will cost the insurer money. To compensate for the increased likelihood of a payout, insurers charge you more money in the form of a raised premium. Here are few things that will surely spike your auto insurance rates.

Distance of Your Commute

Long commutes to work don't just cost you in time and fuel; they'll also boost your auto insurance premiums. The insurer considers the risk is much greater that you'll get into an accident when you're driving during rush hour. Further, if you are in a profession that involves frequent driving, like a pizza delivery person or salesperson, you'll pay for the increased time that you spend in the car because more time spent driving increases the risk of an accident Having a Brush with the Law

Having no accidents or tickets could save you a lot of money on your auto insurance premiums and, as you might imagine, having either or both could cost a lot of money. Insurance companies use a "merit plan" system. Most insurance companies will check for recent traffic violations, whether you are a new or existing customer. After you commit a traffic violation and your insurer learns of it, your auto insurance rates will be higher for the next three years.

Age & Marital Status

A 26-year old or younger male will pay more female in the same category. But overall, if you are 26 or younger you’ll pay more on your insurance. If you're unmarried and without children, you're considered part of a higher-risk category than married couples with kids, which means higher premium for you.

Buying a New Car

Because a new car as an asset is worth more money than an older model, it will cost more to replace. Additionally, if you finance or lease your new car purchase, most lenders require you to carry full coverage at a stated level, which makes it impossible to skimp or strategize only on the coverage you need. You can be wise about how your new ride will impact insurance premiums before you buy. According to a recent study by, the cheapest new cars to insure tend to be larger, sturdy models such as minivans, SUV's and trucks. Don't assume that premium boosts come only with a flashy sports car or other high-priced model. The study indicated that the Honda Civic, for example, commands higher insurance rates simply because it tends to be driven by younger, childless owners who are inherently deemed riskier than parents. Further, it's one of the most stolen vehicle models in the United States.

Lapse of Auto Insurance

Not having any auto insurance, even for just over 30 days, will cause your premiums to rise when you decide to get the insurance policy again. For example, many of my clients called me and said, “I’m going out of the country for 30 days so I need to cancel my policy to save some money.” Then when the client comes back to get the insurance policy again, the rate was much higher than before it was cancelled. When you ditched your auto insurance because you are in an effort to save some money, you've committed a classic case of being "penny smart and pound-foolish." [if !supportLineBreakNewLine] [endif]

The Bottom Line

Auto insurance rates are often based on factors out of your immediate control, including age, occupation, areas where you live, and accidents. Finding agents who can help understand what factors cause your auto insurance rates to rise can help you to shop around for a more competitive provider before you receive a surprise rate increase. It may also cause you to rethink some of your current driving habits.

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