Insurance companies have broad powers to adjust your rates, but they must adhere to specific rules and guidelines. Below, we’ll explain how and when insurance companies can raise your premiums.

Premium Increases at Renewal

Insurance companies typically increase rates when it’s time to renew your policy, which usually happens at the end of your 6-month or 12-month coverage period. Before the renewal date, the insurer is legally required to notify you of any new rate changes, typically 30 days in advance in Florida. This gives you time to assess whether to accept the higher premium or shop around for a better rate.

Mid-Term Rate Adjustments

Mid-term adjustments are rare, but they can happen if you make significant changes to your policy. For example, if you add a high-risk driver or vehicle to your policy, your insurer may increase your rate. Outside of such changes, your insurer generally cannot raise your premium mid-policy without your consent.

When Can Your Insurance Rates Increase?

Several factors can lead to an increase in your car insurance rates. Some are within your control, while others may be more difficult to manage. Understanding these factors can help you avoid unnecessary premium hikes.

• At-Fault Accidents: If you’re found to be at fault for an accident, you can expect your insurance rates to rise at the next policy renewal. Even if you’re not directly responsible, simply being involved in an accident can trigger a rate hike. Insurance companies typically consider your claims history, and even non-fault claims, like those for fire, theft, or natural disasters, can contribute to a premium increase.
• Moving Violations: Traffic violations such as speeding, reckless driving, or running a red light often lead to higher premiums. Even though these infractions may stay on your driving record for several years, they can continue to impact your rates long after the violation. Multiple violations can result in progressively higher rates, as insurers view you as a higher-risk driver.
• Filing Claims: While it’s understandable to file a claim after an incident, frequent claims, even those you’re not at fault for, can lead to an increase in your premiums. Insurers may view multiple claims as an indication of higher risk, and that includes comprehensive claims for things like theft or vandalism.
• Changes in Your Credit Score: In many states, including Florida, insurance companies are allowed to adjust rates based on your credit score. A drop in your credit score could lead to higher premiums, as insurers often view low credit scores as an indicator of higher risk. Keeping your credit score high can help lower your rates, so it’s important to monitor and improve your credit over time.
• Changes in Your Location or Vehicle Use: If you move to a higher-risk area, such as one with higher crime rates or more frequent accidents, your rates may increase. Additionally, using your car for ridesharing or business purposes will often lead to a higher premium due to the increased risk. Commercial use, even for part-time gigs like delivering food, increases the likelihood of an accident and could make your rates rise.

Why Your Insurance Could Be Canceled or Not Renewed?

Insurance companies can also cancel or refuse to renew your policy for specific reasons. It’s important to understand the circumstances under which your insurance may be dropped or not renewed.

• Mid-Term Cancellations: Your insurer can cancel your policy before the renewal period for reasons such as non-payment of premium, license suspension, or material misrepresentation (e.g., lying about the primary driver). Additionally, if your vehicle becomes ineligible, such as being modified for racing or converted to commercial use, your policy may be canceled. In Florida, insurers are required to give at least 45 days’ notice for cancellations, unless it’s due to non-payment, in which case the notice may be as short as 10 days.
• Non-Renewal of Your Policy: While cancellation occurs mid-term, non-renewal happens at the end of your policy period. Insurers can choose not to renew your policy for reasons such as too many claims, excessive traffic violations, or even if the insurer is exiting the market. Most states, including Florida, require that insurers notify you in writing in advance, typically 45 to 60 days before your policy ends.

If your policy is canceled mid-term, make sure you receive proper documentation from the insurer, and ensure that all payment information is up to date. If the cancellation seems unwarranted or based on incorrect information, you have the right to appeal.

Legal and Regulatory Safeguards

Insurance practices are regulated at the state level, with agencies like the Florida Office of Insurance Regulation (OIR) overseeing the industry to ensure that companies operate fairly. Several legal safeguards exist to protect consumers:

• Restrictions on Discriminatory Practices: In Florida and most other states, insurance companies cannot cancel or adjust rates based on discrimination, such as race, gender, or disability.
• Limits on Rate Increases: There are strict limits on when and how insurers can increase rates. If your premium increases, the insurer must justify it. You also have the right to appeal these increases or file a complaint with the state’s insurance regulatory body.
• Non-Renewal Justifications: If your policy isn’t renewed, you have the right to request justification for the non-renewal. If you believe your insurer’s decision is unfair, you can file a complaint with the OIR.

How to Protect Yourself From Unfair Rate Hikes or Cancellations?

1. Request an Explanation

If your rates go up or you’re dropped, ask your insurer for a written explanation. It’s your right to understand why your premiums increased. Insurers are legally required to explain these changes. If you feel the adjustment isn’t justified, don’t hesitate to challenge it or seek clarification.

2. Shop Around

Loyalty often doesn’t pay in this industry. Insurance rates can vary dramatically from company to company, and staying with the same provider doesn’t always result in the best deal. Request quotes from other insurers to see if there’s a better option for your needs.

3. Avoid Frequent Small Claims

Paying out of pocket when reasonable can keep your rates lower. While it may be tempting to file a claim for every small issue, doing so could raise your premiums. Instead, consider paying out of pocket for minor repairs or damages to avoid triggering rate increases.

4. Maintain Good Credit, Drive Safely, and Monitor Your Driving Record

A good driving record and credit score can help keep rates down. Insurance companies often use your driving history and credit score to assess risk. By maintaining a clean driving record and improving your credit score, you can avoid significant premium hikes. Additionally, periodically checking your driving record ensures there are no inaccuracies that could increase your rates.

5. Ask for Discounts

Inquire about discounts such as multi-policy, good driver, or low mileage. Many insurers offer discounts for factors like having multiple policies with them or for driving fewer miles annually. Don’t forget to ask about these when renewing your policy.

Protecting Yourself Against Unfair Insurance Practices

Auto insurance companies have the authority to raise your rates or cancel your policy, but there are rules they must follow. While we don’t handle insurance disputes directly, if you’ve been injured in an accident and your insurance company refuses to pay, that’s where we step in. As personal injury and car accident lawyers, we know how to hold insurance companies accountable. If your insurer refuses to pay after an accident, contact Coffey McPharlin for a free consultation. We’re here to fight for the compensation and coverage you deserve!