Driving is an essential part of everyone’s daily routine. Going to work, shopping, meeting family, friends, clients, etc is all possible because of driving. But with driving comes all the risks of road accidents. Millions of passenger car accidents happen every year in the US, and the number is rising. The chances of you getting in a car accident is more than you think.
Auto insurance policies insure you against most road accidents so that you do not have to pay a fortune for the repairs and medical treatments due to the accident. The high probability of road accidents plus the undeniable need for auto insurance makes getting a vehicle insurance policy as important as a car. But there’s one slight problem here. Auto insurance rates.
Have you ever wondered why car insurance rates keep fluctuating? How does your driving affect your auto insurance rates? The insurance industry works with cutting-edge analytics technologies that assess all the factors related to the risks of accidents and provide rates accordingly. One such factor is driver’s license points. Let’s see how these points increase your car insurance rates, and what can be done to prevent it.
Do Drivers License Points Increase Car Insurance Rates?
Yes, getting points on your driver’s license will increase your auto insurance rates. Any traffic violations, be they minor or major, adds points to your driving license. The type and severity of the violation decide how many points you get. More points equal a higher increase in insurance rates. But if you keep getting points, your driving license can be suspended.
The exact conversion of points to increments in the insurance rates is difficult to calculate. Since the auto insurance industry is so vast and complicated, with different companies operating on their terms, each company has its own conversion rules and different ways of treating different traffic violations.
For example, some companies might slap you on the wrist with just a 5%-10% increase in auto insurance rates for speeding tickets, but some companies might make the rates hop as high as 20% more for the same. Almost every auto insurance company takes DUI seriously, with a massive increase in insurance rates of almost 60%.
Coming to the points, the same applies here as well. Some car insurance companies might increase insurance rates by 20% for one point on your driving license, while others might make it 50%. But from what we have analyzed, on average, for two points, you can expect a price hike of 60% to 120%. This is a ballpark figure. Some might get just a 30% hike for two points, while there are many causes of a mammoth hike of 180%.
States and Points
Different states have different point systems. While one state might give you just one point for disobeying traffic lights, another state will give you four points for the same violation. For example, California gives 2 points for reckless driving, but Florida gives 4 for the same.
But if you look at the price hike in insurance rates, 2 points in California can increase your insurance rates by over a hundred percent, meaning that you’ll have to pay double what you are paying now. California has always been an expensive state for auto insurance. Compare this to Florida, where 2 points will only increase insurance rates by 20-25%.
There are 9 states where the point system has not been implemented. These states include:
Kansas
Hawaii
Louisiana
Oregon
Washington
Wyoming
Minnesota
Rhode Island
Mississippi
Why do Insurance Rates Increase with Driving License Points?
It must have crossed your mind that why do auto insurance companies increase rates if you get points on your driving license? It’s not that you’ve made an insurance claim, or caused a serious accident. Then why do you have to pay more just for a simple speeding ticket?
The reason for this hike is a risk. Auto insurance companies are very careful in managing risks. These companies need to ensure that the number of people making insurance claims is always minimum, while people paying insurance premiums are always maximum. This is what generates revenue and allows them to operate.
Before selling a policy, auto insurance companies do a proper background check to see how likely the person is to get in a car accident and make an insurance claim. This includes checking their driving record, past insurance claims, age, gender, etc. Anything that indicates a higher risk of a potential insurance claim will increase the rates.
A person with a DUI charge isn’t much bothered about traffic rules and safety. So the insurance company charges them more. The same is applicable for points. Points on your driving license show that you are not a careful driver, hence insurance companies see you as a high-risk individual, and charge more money for the same policies.
Auto insurance policies that will get a price hike after getting points on your driving license include liability coverage, collision coverage, uninsured/underinsured motorist coverage, personal injury protection plan, etc. Liability coverage and collision coverage will be impacted the most, and these two policies are the most important in the bunch.
How to Avoid Price Hike?
“Prevention is better than cure” is the apt thing in this situation. Once you get points on your driving license, every insurance company will notice it. While some companies will offer some discounts, it will be very difficult to find auto insurance companies with the lowest rates and great coverage.
So avoid speeding tickets, wait patiently at the traffic lights, avoid reckless driving, drag racing, etc, and most importantly, do not drive under the influence. That’s the only way you can avoid points on your driving license and an increase in your auto insurance rates.
