I recently received my latest 6-month auto insurance renewal and it went up $100 over the previous 6-month period that had been pretty steady for years. What? Why? My driving record is excellent with no change for years. What happened? Why the big bump in my auto insurance rate?
I called my insurance company to find out why. One big reason provided was that during 2020 when traffic volumes were sharply lower during the pandemic response, some of those who were driving did so irresponsibly. Some were driving on the more open roads with excessive speeds and the number of traffic crashes did not decline with the traffic volumes, resulting in more significant crash losses for insurers, meaning a higher risk for losses in my North Sound zip code. This issue carried over into the first half of this year.
Digging further, I found auto insurance companies weigh varying information in establishing their rates. Factors involved in auto insurance rates include how much and how often one drives, age, marital status, gender, smoking status, job and education, zip code, the type and amount of coverage and credit history.
But there is another key factor in insurance rates as well just here in Washington State, and that is credit history. Back in March of this year, Washington State Insurance Commissioner Mike Kreidler issued an emergency rule prohibiting insurers from using credit scoring to establish insurance rates for three years after the current Covid-19 pandemic is declared over. The emergency rule applies to not only auto insurance, but also homeowners’ and renters’ insurance.
At the time, Kreidler indicated the rule was needed since 120 days after the President declares an end to the pandemic national emergency, temporary federal protections on pausing reports of negative credit information will end. At that point, credit bureaus collecting credit data will have a history that is inaccurate resulting in unreliable credit ratings.
President of the NW Insurance Council Kenton Brine noted recently, “This removes the super accurate tool and dumbs down the rating process, and that means people who should be paying less will end up paying more, and we don’t think that’s fair.” And that is what happened to me together with my zip code’s great insurance risk, resulting in my $100 auto insurance rate jump. With my good credit score removed from the insurance rate process, I am now mixed in with all insured drivers. Lower credit rating Washington drivers typically pay up to 80% more per month for auto insurance, according to Kreidler.
When your auto insurance renewal arrives, check and see if your rate also rises. If so, contact your insurance company or agent and see what can be done to alleviate the change. For instance, perhaps you are not driving as many miles these days or your deductibles can be adjusted.
Imagine if you drove in other states. A recent study found that when compared to east coast drivers, west coast drivers pay on average 45% less per month for auto insurance. Here on the west coast, Washington drivers are the safest with 27.45% reporting violations compared to California at 27.63% and Oregon drivers at 28.7%. Despite the better drivers in the Evergreen State, Washington drivers pay $10 to $25 more per month for auto insurance. The missing credit ratings make a difference.
And shop, shop, shop for better deals. There are many out there. Do not pay higher premiums when you should not have to.