In most of the states in USA, the Motor Vehicles Department has the point system, using which the department tracks your driving record. In general, each type of infringement (moving violations, parking tickets, at-fault accidents, driving under the influence, etc.) is assigned a certain points. When you are found guilty of any one of these infractions, the appropriate number of points is added to your driving record. The more points you have on your driving record, the more expensive your policy will be. The auto insurance company has the right to review the driving record of anyone, who applies for an auto insurance policy from them.
The purpose of this initial review is of two-fold:
- To determine whether you will be able to meet the insurer's standards of insurability
- To evaluate level of your risk potential
Once the policy is issued, the insurer will start reviewing your driving record according to the frequency of violations or accidents as per the standards mentioned in the policy. It is difficult for the insurers to have the resources or the inclination to run daily checks on the driving records of every policyholder. On instances such as the following you can expect that the auto insurance company will definitely be checking your record:
- When you initially apply for the auto insurance coverage
- Change in policy (increased coverage amounts, etc.)
- Addition of vehicle to the policy, or changing the covered vehicle
- At the time of renewal of policy
If the review of your driving record reveals of any negative information, there is a greater chance that your insurance rates will increase. Many Insurers will use their own point system to determine the amount of the increase, if any. Although these systems can vary, most of the 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 likely to have surcharges on your auto insurance that will generally result in a higher car insurance rate. The number of points determines the extent of premium increase on your car insurance rate.
Lower Premium
Most of the insurance companies would reduce their rate based on the motorist’s driving record. When there is no accident or traffic violation you get a lower premium. At circumstances, you will be given discounts too, when you have a track record of no traffic violation.
Driving Under Influence
Drivers having DUI (driving under the influence) on their driving records can expect their car insurance rates to go up at an astounding rate. An individual who has a track record with DUI is labeled as a high risk driver by all the insurance companies. They also consider you a financial risk to the insurer. In some cases insurance premiums are doubled or even tripled due to a DUI offence depending upon the insurance company’s policy. This is to discourage irresponsible drivers and to protect other lives and properties.
Driving Violations
Speedy and careless driving could influence the car insurance rates. These violations can come back to affect the customers even if it happened five years ago. Any traffic violation can be used to determine the rate on an insurance policy. If the driver maintains an excellent driving record, that would get the best rate for his/her auto insurance.
Lower deductibles
If you have a good driving record, you can expect an offer of reduced deductibles. Even if you are involved in an accident and your out-of-pocket expenses would be at a very lower rate. This would be very beneficial when you are required to make repairs to your vehicle without any additional expenses.
Having a good driving record is something that all consumers would strive for. It's cost effective for insurance companies to make sure that the likelihood of a claim is much less. Hence driving record plays very important role to play in determining the insurance rates.