Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Apr 13, 2022

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Here's what you need to know...

  • There are scenarios where quotes that are given by agents and brokers are inaccurate
  • When a car insurance quote is inaccurate, it is called a misquote
  • There are times when the rate increases are beyond your control

When you receive your car insurance bill and you have noticed that the premiums have gone up, it might seem as if your rates have gone up for no reason whatsoever.

When carrying an insurance policy, it goes through different stages where increases are most common.

As a consumer who is obligated to buy car insurance, knowing when and why your premiums can go up is critical if you want to avoid sticker shock when you open your email.

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Why do rates go up shortly after you buy insurance?


When people imagine their rates going up, they assume that they will have at least one policy term where their rates will remain the same. After all, you buy insurance after getting quotes that you assume will be accurate.

Unfortunately, there are scenarios where quotes that are given by agents and brokers are inaccurate.

Here are reasons why misquotes can happen:

Agent Error

When the agent inputs the wrong data that leads to lower rates, it is called an agent error. As long as an agent does not incorrectly quote the applicant, it is not a punishable mistake.

This is why anyone who applies for insurance should take time to review the application in detail to make sure all rating factors are true and honest.

Applicant Error

If the policyholder gives the wrong information about their accident history or driving record, a misquote is caused by an applicant error.

As long as the applicant wasn’t guilty of material misrepresentation, the policy will still be issued.

The only difference will be that the premiums will be higher than the policyholder budgeted for. How much higher depends on what was found by the underwriter.

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How long does a company have to increase premiums after inception?

Insurance companies cannot decide to increase a policy’s premiums for no reason.

There is only a short window of time that the company will have to assess an application and decide whether the risk is worth taking.

Knowing when increases are allowed and when you can feel like you are in the clear is important. Insurance policies go through different stages of life.

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The stages consist of the following:

1: The quote phase

During this phase, prospective clients will request price estimates. At this time, the client is pricing the product and reviewing product offerings.

There is no guarantee that the quote that you receive will be the same after the application is reviewed.

2: The application phase

Once a client decides to proceed with a specific quote from a specific company, they will submit an application.

During this phase, the client will provide more detailed identification information and answer questions that will help during the next phase.

3: The underwriting phase

Underwriting is the most important phase when it comes to a rate increase. During underwriting, professionals will order motor vehicle reports and claims reports to see if the applicant was honest.

If the underwriter finds new information, the application is updated and rates are changed before issuance.

4: The issuance phase

When the policy is ready to be issued, a new bill and declaration’s page is sent to the policyholder. If the rates have changed, payment must be remitted to bind the coverage.

After issuance, the rates will be locked until the renewal date.

5: The safe phase

This phase ranges between 6 months and 12 months depending on the length of your term.

Reasons for Rate Increases at your Policy Renewal


If your rate increase is happening at your renewal, there could be multiple reasons why you are being charged more.

These reasons may either be because of what has happened to you in the last year or because rates have changed.

Reasons Specific to Your Policy

Here are some common reasons why rates increase:

  • You have filed an at-fault or chargeable claim during the policy period
  • You have a moving violation and are convicted of it before the record is run
  • You drive more, move, have a new driver in the home, or are considered a high-risk

Reasons Specific to the Company or State

There are times when the rate increases are beyond your control. If the company has filed for a rate increase or, you can expect higher bills without any changes.

If you are in a hard market and your rates have shot up, it might be time to start comparing quotes.

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  1. https://www.thebalance.com/car-insurance-provider-made-a-mistake-527069
  2. https://www.insureuonline.org/consumer_auto_faqs.htm
  3. http://carinsurance.about.com/od/WaystoSave/tp/What-Is-An-Insurance-Quote.htm
  4. https://www.finweb.com/insurance/the-basics-of-underwriting-insurance.html#axzz3hA8vPwIz
  5. https://www.360financialliteracy.org/Topics/Insurance/Cars-and-Auto-Insurance/Will-Your-Auto-Insurance-Premiums-Go-Up-after-an-Auto-Accident
  6. https://www.huffingtonpost.com/joanne-doroshow/heres-really-why-your-ins_b_775077.html