February 7, 2010

Can Auto Insurance Rates Legally Increase Without Notice

Auto insurance companies, like many types of insurance providers, are carefully regulated by the government. However, they are still businesses, and companies must profit to survive in the market. While both parties in an insurance agreement are bound by contract, there are still several instances when an auto insurance provider legally reserves the right to change their rates without notice.

Most importantly, a driver who is routinely cited for driving violations can be certain to see their auto insurance quote rise. Auto insurance companies need to make money, and the risks of insuring a reckless or dangerous driver force them to raise their rates to compensate. Drivers who are in accidents often see their rates rise as well, for the same reason. Insurance rates also may rise without notice if the driver files a claim. Fault does not necessarily come into play in this situation. If the driver was the aggrieved party in the accident, the costs of medical expenses or vehicle repair may still prove prohibitively expensive to the insurance company, particularly if the other party involved was driving without insurance.

If a driver is cited for a violation like driving under the influence or any number of misdemeanors, the court may suspend the driving license. The only way to regain this license and return to the road is to file for a type of insurance called SR22. The SR22 form is a pledge from the insurance company that they take responsibility for insuring the individual, even though the driver has proved reckless in the past. As may be obvious, insurance companies do not appreciate the added risk of insuring such drivers, and will often raise rates or even charge new premiums in response. Insurance companies are often notified of such violations even before the driver applies for the SR22 auto insurance change, and raise their rates without notice and even before the next billing cycle.

In all these instances, the company is responding to a change from the insured driver. If the driver participates in accidents, is found to drive intoxicated, or is cited while behind the wheel of a car, the driver has effectively modified their contract. By changing the circumstances of the policy through reckless or dangerous behavior, the driver has forced the insurance provider to reexamine the policy. The provider of insurance can legally adjust their auto insurance quotes without warning or advance notice to fit the new situation. Therefore, a driver who uses a vehicle in a safe and wise manner can be assured that their rates will remain constant between renewals.