Premium Increases
Premiums on car insurance policies are reviewed once a year and insured clients are often upset when they find that their car insurance premiums have been increased for the coming year. They do not understand that premiums continue to increase even though they did not submit any claims for the year.
The first thing you need to do is to find out what the market value of your car is every year and then you must take the responsibility of advising your insurance company to adjust your insurance premium accordingly. Insurance companies cannot automatically reduce car market values as there are a number of factors that determine the current market value of your car. (See market value entry in this glossary for more details.)
The reasons why car insurance premiums increase yearly (taking the above out of the equation) are as follows:
- Every year there are more cars on our roads and this increase the likelihood that you may be involved in an accident. When the risk increases, car insurance premiums increase.
Ø As long as the crime rate remains high, cars are stolen and hijacked; the premiums will continue to increase. - The inflation rate also plays its part as it increase the running costs of the insurance company.
- The cost of car repair has increased dramatically and this also plays a big role in car insurance companies’ decision when increasing rates.