In recent years, many drivers in Colorado have seen an increase in car insurance premiums. If you are cautious driver with a clean record, you may be left asking why your rates changed for no obvious reason. Unfortunately, insurance premiums are not based solely on your own risk factor as a driver. To the contrary, there are many factors that lead to an increase in insurance rates.
Why are Insurance Rates Increasing in Colorado?
Auto insurance is a heavily regulated business after all. Simply put, there is very little margin for insurance companies to absorb increases in costs. If costs go up for insurance companies, they will offset by charging customers increased premiums. This applies to all insureds, even those who do everything right on the road. To help you understand why your insurance rates increases for no apparent reason, here are 11 factors that could have contributed.
- Cost of Living: The cost of living has been steadily rising in Colorado over the past few years. The average state-wide annual car insurance premiums have increased by $272.00 in 2018 with Colorado drivers paying an average of $1,682.00.
- City: Car insurance prices are set at the local level with many location-specific variables influencing premiums. That means drivers can see major differences in auto insurance rates based on their zip code.
- Gender: while gender does not have a sizable effect on auto insurance premiums, it is used as a rating factor by car insurance companies. On average, women pay an average premium of $40.00 more than men.
- Age: As people age, car insurance rates change. As a general rule, car insurance is more costly for teenage drivers, as they are often viewed as inexperienced. For example, auto insurance costs $6,956.00 annually for a 16-year-old motorist but only $1,289.00 per year for drivers aged between 50-59.
- Marital Status: Newlyweds typically receive a reduction on insurance premiums by an average of $86.00 per year.
- Credit: auto insurance companies reference credit history as a way of determining how reliable a prospective customer will be. Data trends suggest drivers who maintain solid credit scores are more insurable, as they are less likely to file claims. In Colorado, drivers who carry excellent credit can save an average of $1,556.87 per year, contrasted with drivers with less-favorable credit scores.
- Risk: Insurers who were determined to be at fault in a car accident or guilty of a vehicular infraction, may see an increase in car insurance premiums. In Colorado, a person’s first minor at-fault accident results in an additional $619.07 per year.
- Vehicle: Insurance companies use various statistics to determine insurance rates for drives, with the vehicle’s make and model another important factor. Luxury sports cares and foreign-made vehicles are usually more expensive to insure because their parts are more expensive to replace. Some of the cheapest cars to insure are models such as Honda, Subaru, and Jeep. While popular cars in Denver, it is also worth mentioning that these are also the top of the list for stolen vehicles in Colorado. Insurance companies use these statistics as well, bumping insurance rates for car models more likely to be stolen.
- Rising Repair Costs: Newer vehicles have more sophisticated technology. When these items are damages, it costs more to fix the vehicle.
- Rising Medical Costs: As there are more drivers operating vehicles in Colorado, accidents have increased. This causes an increase in how much is paid out by insurance companies for each claim. Rising medical costs is another reason for steep hike in price for costs per claim, which translates to higher auto insurance rates. According to the Center for Medicare and Medicaid Services, national health spending is projected to rise at an average annual rate of 5.5 percent from 2017 to 2027. Spending will reach $5.7 trillion by that time.
- Extreme Weather: Colorado has been subjected to significant weather events, including blizzards, floods, tornadoes, and an incredible amount of hail. These catastrophes lead to an overall increase in claims in specific areas, including the Denver metropolitan area.
How to Fight an Insurance Premium Increase
Notwithstanding the above-information, the reality is that if people are not being issued citations or getting into accidents, their car insurance premiums should generally go down over time. This is because your driving history demonstrates to the insurance company that you are a good driver and as a result of the loyalty you have for the insurance company. However, it is possible your insurance rates will increase without reason. Rest assured, you may be able to reverse the increase. Below are a list of steps you should follow to fight an insurance premium increase in Colorado:
- Call Your Insurer: Call your insurance company and ask why your rates have increased. As outlined above, the increase may be in reaction to an increase in insurance rates approved generally. Unfortunately, it is difficult to get around those. Other increases are the result of your insurance status.
- Provide Necessary Information: When speaking with your insurance company, it is necessary to provide information to prove the increase in premiums was based on false information. For example, if your rates increased because your insurance company mistakenly believed you were in an accident, you may be able to get back on your insurer’s good graces by submitting documentation demonstrating contrarily. Providing an update driving record can be important since many insurance companies do not pull driving records often.
- Provide a Corrected Credit Report: When your insurance rates increase because of derogatory information on your credit report, your insurance company should notify you and give you the right to pull a free report. If you are able to provide evidence the negative information is inaccurate and it is removed from your report, the credit bureau will notify your insurance company of the erroneous report.
- Give Evidence of Other Mistakes
- Contact the Colorado Insurance Commissioner: If you believe your insurance company is not being responsive to your requests to fix a premium increase based on inaccurate information, you can contact the state’s insurance commissioner. While the commissioner may not be able to help you, it is another resource that may provide leverage.
- Switch Insurance Companies
In addition to the foregoing, you may also want to review your insurance policy to see if there are unnecessary coverage. For example, you could increase your car insurance deductible for collision and comprehensive coverage. While this measure may lead to increased deductibles in an accident or if your vehicle is stolen, it also means you are paying less of a premium per month. You may also want to ask your insurance company if they provide any discounts. Many companies give discounts for good students or for being a good driver. It is worth looking into as well.
Contact a Denver Personal Injury Law Firm
If you have questions about your insurance before or after a collision, contact the Denver Personal Injury Law Firm of Bowman & Chamberlain, LLC, at 720.863.6904 or email us. Our lawyers handle a wide range of personal injury cases, including Motor Vehicle Accidents, Bicycle Accidents, Pedestrian Accidents, Slip & Fall Accidents, and Dog Bites & Attacks. We service Arvada, Aurora, Boulder, Broomfield, Denver, Commerce City, Lakewood, Littleton, Thornton, Westminster, Wheat Ridge, and other parts of metropolitan Denver, Colorado.