How Driving Record Points Affect Car Insurance Rates
Your driver’s license is the only place you don’t want to score points. The more of these points you have, the closer you are to facing some pretty severe and damaging consequences and the higher your insurance rates will be.
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It’s important, therefore, that you understand how the point system works, what it takes into account, and what you can do to turn a bad situation good. To help you understand more about this point system, keep reading.
1. Auto Insurance Companies Don’t Use the Same Point Systems
It is true that the Department of Motor Vehicles (DMV) and insurance companies use point systems. However, they are not the same; they use their own systems.
The DMV point systems apply when you are convicted of moving violations. If you get too many points within a predetermined period of time, your license will be suspended.
Insurance companies, on the other hand, use their own point systems. These systems are based on specific motor vehicle offenses, things that increase your risk and, therefore, your chance of making a claim.
Ultimately, the insurer carrier only cares about how much money you are likely to cost them in the future, so they use point systems that assign different weights to different violations.
For instance, they may give you 1 or 2 points for minor traffic violations, but add between 5 and 6 points for racing, reckless driving, or a DUI offence.
Many car insurance companies use their own point systems, ones tailored according to their underwriting process. Some, such as those in North Carolina and Minnesota, use systems set by state regulators while others look to guidelines created by the Insurance Services Office (ISO).
The more points you have, the higher your insurance quotes will be. Insurers will generally hit you with surcharges when you reach certain thresholds. You’ll pay more when you hit a certain number of points, and you can get there either by accumulating minor convictions or getting a single major conviction.
2. Your Auto Insurance Rates Will Increase Substantially
The more of a risk you are, the more likely you are to make a claim and cost the insurer money. To account for this, the underwriters need to increase your premiums.
If a 30-year-old driver has a perfectly clean driving record and drives a low-cost car fitted with numerous safety features, the insurer knows there’s only a small chance they will make a claim and they can set the premiums accordingly.
If, however, that driver has a habit of driving over the speed limit and at least one incidence of driving under the influence, the risk increases, and their rates need to match that.
Their ultimate goal is to make more from you than they pay out in claims and if you keep accumulating infractions and being involved in at-fault accidents, they’ll need to set the bar very high.
The following will give you an idea of how much you can expect your car insurance rates to increase following certain violations:
- DUI/DWI = 75%
- Reckless Driving = 70%
- At-fault accident = 30%
- Running a Red Light = 24%
- Texting While Driving = 22% (not in all states)
- Speeding = 20%
- Making an Illegal Turn = 20%
- Failure to Stop = 18%
And that’s not the only issue here. If you keep accumulating points, whether through several major violations or a number of minor ones, your license will be suspended and if you are caught driving while suspended, you could face jail time.
3. Not All Violations Add Points
Parking tickets and other minor offenses, including a citation for a broken taillight, will not add points to your license but you will still need to pay a fine. In some states, a DUI will not add points to your license either and, instead, will result in an instant suspension.
Texting while driving can also add points to your driver’s license and result in a serious insurance rate hike, but that’s not true for all states and it is illegal for insurers to increase rates for this offence in North Carolina and Idaho.
Many states still consider this to be a serious offence, including:
- Alabama: Potential Points Added to License = 2
- Colorado: Potential Points Added to License = 4
- Florida: 3 Points, but only if it’s a second offence. 2 more added for texting in a school zone and 6 points if it causes an accident.
- Georgia: Potential Points Added to License = 1
- Kentucky: Potential Points Added to License = 3
- Maryland: Potential Points Added to License = 1 point. Moving violation also added to driving record.
- Missouri: Potential Points Added to License = 2. Only applies to drivers under 21.
- Nebraska: Potential Points Added to License = 3
- Nevada: Potential Points Added to License = 4
- New York: Potential Points Added to License = 5
- New Jersey: Potential Points Added to License = 3
- Nevada: Potential Points Added to License = 4 (only for second offence)
- Vermont: Potential Points Added to License = 4 to 5
- Virginia: Potential Points Added to License = 3
- West Virginia: Potential Points Added to License = 3 (for multiple offenses)
- Wisconsin: Potential Points Added to License = 4
4. They’re Not Used Everywhere
Driver’s license points are not used in all states, but insurers and authorities will still monitor your driving record and penalize you if you accumulate too many offenses. States where driver’s license points are not used include:
- Rhode Island
5. They Don’t Last Forever
Most points will disappear off your driver’s license after a few years, but there are many exceptions.
In some states, including California, hit-and-run offenses and drunk driving offenses will remain on your record for up to 10 years and may continue to impact your car insurance rates for most of that time.
6. You Can Get Points for Not Wearing Seatbelts
Seatbelts are there to keep you safe and research has proven time and again that they can reduce the risk of fatalities and the need for expensive claims. Generally, you won’t receive any points on your license if you don’t wear a seatbelt. In the state of New York, however, if you have a child in the car who is not wearing a seatbelt, you will be cited and may receive 3 points.
Your insurance rates will also increase by between 1% and 4%. After all, if your child is caught not wearing a seatbelt, it means they’re more likely to avoid wearing one in the future, which, in turn, increases the risk of serious injuries and massive claims following an accident.
7. It’s Not the End of the World
If you have many points on your license, your car insurance premiums will almost certainly increase. But it’s not the end of the world. There are still ways you can save money, ways you can offset those high insurance costs and bring your rates down to a respectable level. These include:
Comparison shopping is key if you want cheaper auto insurance quotes, and this applies whether you’re a low-risk driver or a high-risk driver.
There are numerous auto insurance companies out there and all of them will consider your application. By shopping around, you can guarantee yourself the very best coverage for the lowest possible price.
Look for Accident Forgiveness
Some insurance policies will overlook your first accident, allowing you to continue at the same rate. Known as accident forgiveness, this addition typically makes your car insurance quotes more expensive but will save you a lot of money in the long term if you are ever involved in an accident.
Improve Your Credit Score
Your credit score is crucial to setting your insurance rates. Bad credit drivers are more likely to be involved in a car accident and to make a claim, so insurers will charge them higher rates on average.
You can improve your credit score by maintaining your monthly payments, increasing your credit limits where possible, reducing your debts, and avoiding any new credit and loan applications.
Take a Defensive Driving Course
In some states, you can take a defensive driving course to dismiss a violation and, in most of them, one of these courses will give you a big discount.
Safety driving courses prove that you have the skills needed to stay safe and avoid accidents, while also showing that you’re committed to proving yourself.
Reduce Your Coverage
As long as you have the minimum state insurance requirements, you’re legal. You should never skimp on insurance just to save a few bucks. If you have a brand new car, for instance, and your state minimums only cover bodily injury liability and property damage liability, you should still look into adding collision and comprehensive coverage.
But if you have an older car and can afford to take those risks, go for it. The difference between minimum cover and full cover is massive and might be unnecessary.
Increase Your Deductible
The higher your deductible is, the lower your insurance rates will be. A deductible is an amount that you pay before your insurance takes over. If it’s high, it means the insurer will pay less in the event of an accident and can, therefore, pass some of those savings onto you.
Go Paperless or Pay Upfront
Small discounts are offered to policyholders who opt to go “paperless”, which means everything is done electronically and there is no paper waste. Discounts are also offered if all premiums are paid upfront, as opposed to on a monthly basis.
Stay Safe and Wait
The best thing you can do to reduce the cost of car insurance is to maintain a clean driving record and avoid any accidents and moving violations. If you do this for a few years at least, you will see a noticeable reduction in your car insurance premiums.