How Your Driving Record Impacts Your Insurance Rate
most states, the motor vehicles department has a "point" system, which
is used to track your driving record. Generally, each type of
infraction (moving violations, parking tickets, at-fault accidents,
driving under the influence, etc.) is assigned a certain point value.
When you are found guilty of one of these infractions, the appropriate
number of points is added to your driving record. The more points you
have, the worse your record.
Typically, a car
insurance company has the right to review the driving record of anyone
who applies for a car insurance policy from that company.
The purpose of this initial review is two-fold:
However, each insurance company has its own method of evaluating
applicants, so the points on your driving record may or may not have a
direct impact on the rates you pay for car insurance.
- To determine whether you meet the insurer's standards of insurability (i.e., whether you will be issued a policy at all)
- To evaluate your risk potential (i.e., how much your insurance will cost).
Once you are issued a policy, your car insurer probably has the right
to review your driving record at any time (depending on your state). Of
course, few insurers have the resources or the inclination to run daily
checks on the driving records of every policyholder, so the frequency
of these checks actually may be quite low. There are, however, certain
times when you can be relatively sure a car insurance company will be
checking your record. These include:
If a review of your driving record uncovers negative information,
there's a chance your insurance rates will increase. Insurers typically
use their own "point" system to determine the amount of the increase
(if any). Although these systems can vary, most insurers use a system
based on the Safe Driver Insurance Plan, which is issued by the
Insurance Services Office (ISO).
- When you initially apply for coverage
- When you request a change to your policy (increased coverage amounts, etc.)
- When you add a vehicle to your policy, or change the covered vehicle
- When your policy comes up for renewal
The Safe Driver Insurance Plan lists different types of car accidents
and moving violations, and assigns a "point" value (from 0 to 4) to
each type based on the severity of the incident. Under the Plan, as you
accumulate points, you are assessed surcharges that generally result in
higher car insurance rates. The number of points charged determines a
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