You’re a cautious driver – you have no speeding tickets on your record and you haven’t recently had so much as a fender bender in a parking lot. So, if you have seen your auto insurance premiums increase, you’re probably asking why your car insurance went up for no obvious reason.

If you’re feeling frustrated about a premium hike, you’re hardly alone. Data from the Bureau of Labour show that 4 out of 5 drivers saw car insurance rate hikes last year and  between 2006 and 2016 auto insurance costs increased 50 percent – well above the overall rate of inflation and the increase in new car prices.

So why is your car insurance so expensive? You may think changes in your rate are based largely on your own risk factors as a driver. For instance your premium payments can rise following an accident for which you are at fault, or if you receive a ticket for a traffic violation.

That’s easy to understand, but there’s a lot more factors that can increase your rate.

Beyond being a cautious driver

If you’re safe on the road shouldn’t your premium also be safe from big hikes? Not necessarily. There are many many other factors that can also lead to premium increases. Some are largely beyond your control.

Auto insurance is a business, after all. If costs go up for insurers, this can mean higher rates for customers, even those who do everything right on the road.

“Auto insurance is heavily regulated, so there is no margin for insurers to absorb increases in costs. So when costs rise, rates rise,” explains James Lynch, chief actuary and VP of research and education with the Insurance Information Institute.

Why did my car insurance go up?

To help you understand why your rate could go up without an immediately obvious reason why, here are 8 factors that could be pushing your premiums up.

1. A lower credit score

In most states (currently excluding California, Massachusetts and Hawaii), auto insurers factor in not just your habits on the road but also your credit-worthiness when considering premium rates.

As recently reported, 95 percent of auto insurers use credit history in their underwriting decisions. So even if you have a stellar driving record, a poor credit score might push up your rates.

Shockingly, a low credit score might affect your insurance rates even more than a DUI.

Estimates suggest your average annual rate might increase approximately 27 percent if your credit score goes from excellent to fair. If your score drops from excellent to poor your rate could double.

Consumer advocates have come out against this practice. It may discriminate against those with lower wealth and education levels, and disproportionately affect minorities.

2. Moving 

You likely know that auto insurance rates can vary widely by state. But even moving to a different ZIP code just a few miles away can cause your rates to jump. There are many reasons this might happen.

You may have moved to an area where the crime rate – including auto theft – is higher. Or there may be more population density in your new area. This means more cars on the road and the higher potential for accidents. Or there simply may be a higher rate of claims in the neighborhood.

Moving just a few blocks away to a new home could raise your rates by more than 60 percent.

3. Insurance fraud

You may have never told so much as a white lie to your auto insurance company. But other people’s lies, both large and small, may be adding to your premium rate. Insurance fraud comprises a range of behaviors, which can be seemingly minor (inflating the damages for an accident that did occur) or extreme (completely fabricating or staging an accident).

According to Verisk Analytics, automotive insurers lose $29 billion per year in ‘premium leakage’ – missing or erroneous underwriting information that undermines their rating plans. Since this adds to insurers costs, this can ultimately lead to you paying more for your own policy.

4. Rising medical costs

Since people are driving more and more, accidents are on the rise. This causes an increase in how much is paid out by insurance companies for each claim. Rising medical costs is the reason for the steep hike in price for cost per claim, which translates to higher auto insurance premiums.

Health care costs are climbing – national health spending is projected to rise at an average annual rate of 5.5 percent from 2017 to 2026, according to the Centers for Medicare and Medicaid Services. Spending will reach $5.7 trillion by that time.

Insurance payouts for bodily injury claims increased insurer grew 6 percent between 2012 and 2017 – roughly double the rate of medical inflation.

When auto companies have to pay out progressively larger medical costs following at-fault accidents caused by their policyholders, the whole pool of policyholders – even those who have never been at fault – may be affected.

5. Extreme weather

If there has been a significant weather event in your area – hurricane, blizzard, flood – this may affect your auto insurance rate, even if it isn’t right away. Such catastrophes lead to an overall increase in claims in a specific area, so insurance companies are forced to raise rates to make up for that.

Across the U.S., there has been increasingly severe weather – from hail storms to flash floods – over the past few years, according to a 2017 report from Farmers Insurance. If such patterns persist, the weather report may increasingly affect your premium.

6. Uninsured drivers

You’re doing the right thing by having an auto insurance policy. Your rate may go up, however, because not everyone is doing the same. The nationwide uninsured rate increased from 12.3 percent in 2010 to 13 percent in 2015, according to the Insurance Research Council.

Dealing with the uninsured claims process can be a massive expense for insurance companies. Uninsured motorist claims totaled $2.6 billion in 2012, per the IRC. The average cost of an uninsured motorist claim at approximately $20,000.

This expense can then be passed on to policyholders. You may also spend more through adding uninsured/underinsured motorist coverage to your policy (some states require this).

7. Distracted drivers

More accidents means more potential claims for insurance companies to pay. Accidents have been on the rise in recent years.

While hard to draw a direct line of causation, distracted driving is suspected to play a part. Distracted driving has become more prevalent with the rise of smartphone use and internal auto technology – 3,450 people were killed in distracted driving incidents in 2016, according to the National Highway Traffic Safety Administration.

“Car consoles have gotten more complex, and more people have smartphones. People have a disturbing tendency to fiddle with both while driving,” Lynch says. “These cause more accidents.”

The more accidents, the higher the overall costs for auto insurers. These costs are passed on to all drivers, even those who make sure to avoid distractions while on the road.

8. Rising repair costs

The costs for auto repairs are steadily rising, and this can be passed along to the consumer through increased premiums.

“Newer cars have more sophisticated warning devices built into bumpers, and they have more gadgets – like automated seats and sound systems,” Lynch says. “When these things get damaged in a car, it costs more to fix the car.”

Taking Action

Even with all these factors at play, no one wants to pay more than they have to for car insurance – especially when it feels like it went up for no reason.

You don’t have to just accept your new increased auto premium rate. There’s a few things you can do, like consider increasing your deductible, or when it makes sense, opting for liability rather than full coverage.

But one of the best ways to save on car insurance is to keep shopping around. There’s plenty of competition for your auto insurance dollars, so it could pay well to shop around and switch car insurance companies to find a better deal. This doesn’t have to be time-consuming experience it used to be.