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Things That Can Raise Your Insurance Rates

T.L. Bodine
Insurance Policy

Most people buy insurance hoping to never need it, and in many cases that's how it works. This is good news for insurance companies, who can only profit if they earn more in premiums than they pay out for claims. In general, people who are considered "high risk" will always pay more for insurance than low-risk applicants. This is true across all types of insurance. The exact qualities that make a person high risk vary from one type of insurance to the next.

General Factors Affecting Insurance Rates

One factor that will always cause your insurance premiums to go up is a history of prior claims. If you've already used your insurance in the past, your rates have a much higher chance of increasing. In this way, insurance companies recover the cost of paying your claim.

If you have a track record of claims with one company and try to switch providers, the new company will review that and may modify your premiums accordingly. If you have ever been dropped by one insurance company because of a claim, future insurers may be more likely to charge you higher premiums.

Multiple Policies

The other thing that will affect your premiums is your quality as a customer in the eyes of the insurance company. Most insurers offer multi-policy discounts to people who carry two or more policies through their company. You are worth more to them as a client when you pay premiums on several policies.

Additionally, the funds from one policy can cancel out the cost of a claim on another policy. Similarly, people who have been insured with a single company for a long time are often rewarded with loyalty bonuses, especially if they've been claim-free the entire time.

Policies and Companies

Aside from these things, the factors affecting your rates will vary from one type of policy to the next and even between insurers. Each insurance company uses its own formulas to calculate risk, and certain behaviors or circumstances may be viewed as high-risk by one insurer but not by another.

Because of that, no list on the topic could be exhaustive, but below are some of the most common reasons a person's insurance premiums might be raised.

Auto Insurance Rate Factors

Vehicle Type

Specialty vehicles that are expensive to repair or costly to replace will cost more to insure than cars that are cheap to repair or replace.

Safety Features

Most insurance companies offer a discount for vehicles with certain safety and anti-theft features because these features reduce the cost of claims. For example, a car with GPS tracking can be more easily recovered after a theft than one without GPS tracking, and airbags will reduce the severity of injuries caused by an accident. This saves the insurance company money on its claims.

Your Demographic Information

Insurance companies collect demographic information and base many of their underwriting decisions on statistics. Statistically, drivers under 18 are the most dangerous to insure, followed closely by men under 25. Older drivers and married couples tend to be the least likely to get into accidents, which keeps their rates lower.


Statistical data can only go so far in predicting the likelihood of a person to get into an auto accident. Insurance companies also look at a driver's other lifestyle habits. For example, student drivers can sometimes obtain a discount for good grades. Customers with a bad credit history may wind up paying higher premiums.

Property Insurance Rate Factors

Home Details

Homes that are sturdy and resistant to damage will be cheaper to insure. Newly renovated homes will generally be more affordable to insure than older structures due to changes in safety codes and other factors that influence a home's structural integrity.

The value of the home itself will also affect the price of the policy. Expensive homes cost more to replace in the event of a total loss, which translates to high premiums.


If you live in an area that's prone to certain risks, you will pay more to insure against those risks. You may also be required to buy specialized insurance. For example, people who live in flood zones need to purchase flood insurance and people who live in earthquake zones may only get earthquake coverage through specialized policies. Similarly, if you live in an area prone to wildfires, your coverage may be more expensive due to the increased risk.

Security Features

If your home has a security system, you will usually qualify for a discount as it will have a lower risk of break-ins.


Most homeowners policies include a liability portion, and the rates for this will increase if you have a swimming pool, aggressive dog breed, trampoline or any other potentially risky item or structure in your home.

Health Insurance Rate Factors

Thanks to changes from the Affordable Care Act, health insurance premiums are much more standardized across all companies than they once were. Nevertheless, some people will pay more for insurance than others based on the following factors:


Older people tend to have more health problems than younger people, which makes them more costly to insure. As a result, premiums can be up three times higher for seniors as for young adults.

Geographic location

Health insurance premiums are greatly affected by competition within the local market. If you live in a state with multiple insurance companies, your rates will likely be lower than if only one or two insurers service your area.

Health Factors

Because of the health risks associated with smoking, tobacco users can pay up to 50% more than those who don't use tobacco. Other health factors, including obesity or pre-existing conditions may increase your premiums, but you cannot be denied coverage as a result of these conditions.

Life Insurance

Your Age

In general, younger people are expected to live longer than older people, which makes their likelihood of using a life insurance policy lower. This translates into lower premiums.

Term Length

As above, the amount of time you will be insured affects the cost of the policy. The longer the term, the more likely that you may pass away before the term's end, and the costlier the policy.

Policy Type

The life insurance product you choose can have an impact on the cost of the monthly premiums. For example, whole life insurance typically costs more than term life insurance from month to month.


As with health insurance, smokers tend to pay more for life insurance than non-smokers. Additionally, people with dangerous jobs or hobbies may pay more for insurance or may have perils related to those activities restricted from the policy.

In other words, if you go skydiving in your free time, your insurance company may choose not to cover a skydiving-related death instead of boosting your premium to offset the risk. Either way, this is something you should discuss with your insurer so you know exactly what will be covered.

Keeping Your Rates Low

Insurance companies stay in business by managing risk. By understanding your own risks, you can develop a better idea of why your premiums cost what they do and what you can do to reduce the overall cost of your insurance. If you have questions about a specific discount or ideas for ways to reduce the cost of your policy, you can always discuss them with an insurance representative. Most will be happy to give you ideas about ways to trim money from your insurance costs.

Things That Can Raise Your Insurance Rates