Driving Records Impact Rates
Most states have a “Department of Motor Vehicles” or similar organization that monitors driving records for people licensed to drive in that state. These departments often use a point system to track an individual’s driving record. Infractions such as moving violations, accidents, and others are assigned a certain point value depending on the severity of the infraction. When a person is found guilty of one of these infractions, the appropriate number of points are added to that person’s driving record. The more points you have, the worse your driving record from the perspective of someone reviewing that record.
Auto insurance companies review the driving records of people who are applying for coverage or a policy with their company. This review is designed to determine whether or not you meet the insurance company’s standards of insurability and to evaluate your risk potential. Incidents such as moving violations and accidents negatively impact your driving record while having a clean record for a long period of time will positively impact it.
All insurance companies have a standard of insurability below which they typically will not insure a person at all. These standards vary widely depending on the carrier and what type of coverage options they offer. Some companies prefer to deal only with less risky drivers while others have no problem insuring folks with bad driving histories. In addition, each individual has an associated “risk potential” which is determined by many factors including credit history, age, and many other inputs. Your driving record is a key component in this calculation.
It is important to note that each company has its own unique method of evaluating people applying for insurance, so the points on your driving record may or may not have a direct impact on the rates you pay for your policy. However, it is likely that they will.
Once your policy has been issued, your auto insurer may have the right to review your driving record at any time depending on the regulations in your state. While few insurers have the resources to run daily checks on the driving records of every policyholder, there are, however, certain times when you can be relatively certain that an auto insurance company could (and probably will) check your record. These include:
1) When you apply for coverage for the first time
2) When you request a change to your existing policy such as asking for increased coverage, adding another driver, etc…
3) When you add another vehicle to your policy, or change the covered vehicle to a different one
4) When you have an accident that is reported to your current carrier
5) When your policy comes up for renewal
Should your driving record report information that would be considered by the insurance company as negative – such as a moving violation or two… or an accident – there’s a good chance your rates will go up. Insurance companies typically use their own system to determine the amount of the increase depending on what is shown in a driving record. Most insurers use a system based on the Safe Driver Insurance Plan, which is issued by the Insurance Services Office (ISO).
The Safe Driver Insurance Plan lists different types of moving violations and auto accidents assigning a point value to each type based on the severity of the incident (from 0 to 4). As you accumulate points under the plan, you are assessed surcharges that generally result in higher rates. The number of points charged determines if a premium increase is warranted and, if so, by how much.
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