Why does your car insurance rate go up if you've had a break in your car insurance for any reason?

Answer 1

There are a number of reasons for this. The most important thing to realize that insurance is about predicting future loss. The way an insurance company does this is by looking at drivers that share similar characteristics (insurance history, driving history, credit, type of car, where you live) and comparing them to the average payouts in accidents. Just like getting a speeding ticket costs your insurance company nothing, your rate increases because it is a behavior that is correlated to an increase in the potential for a future loss. Specific to insurance history, reasons that this increases your rate follow: 1 - Drivers that have lapses in their insurance are more expensive from an administrative stand point. If you are stopping and restarting insurance you are costing the company money. Just like any business the cost of administering the product is figured in to the price it charges all customers. 2 - Drivers without insurance do not have the ability to file claims and therefore the insurance company does not know how likely you are to file a claim if you haven't had the ability to. Maintaing a long (3 year+) claim free insurance history, assures the company that you will continue to be claim free and easy to administer. Therefore a preffered rate is offered to people with those characterstics.