Driving for business means you need commercial auto insurance. However, getting and maintaining a policy means paying for it. You have an operating budget you need to balance. However, sometimes you might see your policy’s costs increase. Why does this happen?
Commercial auto insurance rates are determined by risks, which are numerous and can change. Therefore, you can expect to see your policy’s rates change over time. However, you don’t have to let them do so unchecked.
What is My Policy Premium?
When we refer to your policy’s rates, we mean the policy’s premium. This is the cost that you (and every other commercial auto insurance policyholder) pay for the policy itself. When you sign up for your coverage, your insurance agent will determine the rate you must pay. These rates vary from one driver and policy to the next. That is because most insurers set rates based on a driver’s insurance risks.
A risk is your likelihood of filing a claim on your commercial auto policy. Therefore, it is the likelihood of your insurer having to pay out a claim on your behalf. This is a cost risk to them, and as a result, they might have to raise your rates.
Factors that might influence your rates include:
- Your driving record and accident history
- How much coverage you buy
- Where you live
- Your credit score
- Your history of maintaining and paying for insurance
- Accident and theft statistics in your neighborhood
When Rates Increase
Insurers usually don’t increase your rates arbitrarily or randomly. They will usually notify you of the increase before it happens. Many don’t increase rates in the middle of your policy’s term, though some do. They will wait until it is time to renew the policy to change your payments.
Below are just a few of the reasons that your rates might go up.
1. Economic Factors
Many insurers have to periodically raise their rates because of inflation and other economic factors. The overall measurement of how much risk they have to cover could also trigger these rate increases. In many cases, this is an affordable, evenly-distributed increase. These changes might not occur every year. However, your insurer will usually notify you of your rate change every time you renew your policy.
2. You Buy More Coverage
It stands to reason that supply and demand can lead to price increases. So, if you decide to buy a new policy, or increase your existing policy limits, you might see your premiums increase. Likewise, if you drop coverage, the rate might drop. The rate of increase will usually vary based on what coverage you choose.
3. You Buy More Cars or Hire More Drivers
If your business’s driving operations increase, you might see your policy’s rates go up. Again, you have more to insure, therefore, your insurer will take on a greater cost risk.
- Increasing the size of your business fleet might increase your rates because you now have more vehicles to insure.
- By adding employee drivers, you might have to name them on your policy. This might trigger a rate increase because there are now more people to insure.
- If you buy new vehicles to replace old ones, there will now be more value attached to the insured cars. Therefore, risk might also go up, and trigger a rate increase.
Whenever you make changes to your business’s driving operations, you will need to notify your insurer. They can tell you if and how the change might influence any change in your rates.
4. Local Driving Risks Increase
Again, rates might vary based on your chances of having a car accident. To measure this risk, many insurers examine accident risks in localized areas. Therefore, as risks change, so could your rates. So, if there has been a slew of car break-ins in your neighborhood in the last year, this might trigger an across-the-board rate increase. Or, if a new freeway has just opened, bringing more drivers to the area, the same thing might occur.
5. You Make Policy Claims
You will almost certainly see a rate increase if you make a claim on your policy. For example, if your insurer has to pay to repair your car’s damage, this is usually a clear signal to them that your risks have increased. Rates tend to jump the most if, in at-fault states, you are judged as the person who has caused the wreck.
However, not all claims will trigger a rate increase. Also, many insurers will offer accident-forgiveness, which means if you have only one accident in a certain period, you might so no jump in your policy price.
Keep in mind, there are savings options available from most insurers. These might include discounts of various shapes and sizes, along with deductible increases and other opportunities. Of course, you should never drop your policy limits just to save on your rates. However, your Georgia commercial insurance agent can help you compare different policy options that will maximize your savings potential. Therefore, you’ll never have to sacrifice protection just to save a few dollars.