How Your Driving Record Impacts Your Insurance Rate

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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.

Reviewing 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:

1. To determine whether you meet the insurer's standards of insurability (i.e., whether you will be issued a policy at all)
2. 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.

Other Times Records Are Checked
Once you are issued a policy, your 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 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 insurance rates. The number of points charged determines a premium increase.

Driving Courses
Depending upon how many points you’ve received for claims or violations, the courts may mandate the completion of a Defensive Driving Course. Courses are designed to re-instruct you on the effects of distractions within and outside a car, the effects of inclement weather on vehicle handling, driver impairments, and more. Upon completing a course, insurance discounts may be available. Many states offer online courses, making it easy and convenient to fit into your schedule. To find out more, visit www.IDriveSafely.com or contact your local DMV.

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Originally posted September 17, 2004.

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