Driving
Record And Insurance Rate
- In 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, an auto insurance company has the right to review the driving
record of anyone who applies for an auto insurance policy from that
company.
The purpose of this initial review is two-fold:
• 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).
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 auto insurance.
Once you are issued a policy, your auto 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 an auto insurance company will be
checking your record. These include:
• 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
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).
The Safe Driver Insurance Plan lists different types of auto 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
premium increase.
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