When you apply for car insurance, your insurer will build as detailed a picture of you as possible, taking into account your driving history, the car you drive, when you drive, and
how you store the car.
Each of these things lets the insurance company calculate how likely they are to have to pay a claim, and they will calculate the premium to cover this risk.
Insurance points are a key part of that calculation. These points are an indicator of your driving risk, based on your driving history.
Because insurance companies are reticent to discuss calculations, the nature of insurance points can be difficult to determine. Moreover, they also vary state to state, depending on the information that the state DMV collects on each driver.
What is certain is that each state keeps track of its drivers, and assigns them driving report cards. This is a central part of what an insurance company uses to calculate risk when insuring a driver.
WHAT ARE INSURANCE POINTS?
Insurance points are points added to your driving record by your state’s department of motor vehicles. The DMV in your state keeps a record of every violation (moving and nonmoving) as well as at-fault accidents and adds them to a record of your driving behavior.
When you apply for insurance, the insurance company will look at your DMV record for the number of insurance points you have; this will impact on your premium.
If your premium price is much higher than the initial quote offered, it is likely because the insurance company found evidence of a number of insurance points on your record.
Insurance points, therefore, work as a permanent record of your driving, giving a huge amount of information to insurers about the potential risk of insuring you.
Although there are certain common factors across the country, the way insurance points work varies from state to state, so be sure to investigate your own state’s department of motor vehicles for specific details.
HOW DO YOU ACCRUE POINTS?
What you actually need to do to amass insurance points does vary from state to state, although there are certain commonalities that will affect your record. Some states are less open about what they use to calculate your insurance points, and very few insurance companies will talk about the math involved.
The most obvious reason for an addition to your insurance points is a traffic violation or accident that is reported to the police. The police keep a record of all collisions that cause more than a certain dollar threshold of damage (this varies from state to state, but is usually around $1,000).
If you are determined to be at least partially at fault for this, you will get a mark on your insurance points.
It’s generally understood that first offenses for a non-moving violation don’t go on your record. So, if you get a ticket for something like not being able to provide proof of insurance or a passenger without a seatbelt, then you are unlikely to see it added to your permanent record.
Of course, if it is your second nonmoving violation or if you get caught for a moving violation, you will see it added to your record, but generally, there is a little bit of leeway for a minor first offense.
OTHER FACTORS (E.G. POOR CREDIT)
Your insurance company takes into account a multitude of factors when assessing your insurance premiums, and not all of them are driving related.
You may, for example, see your premiums increase
if you have poor credit, as this has a strong correlation with requiring insurance companies to pay claims (since it is less likely you can pay for damages yourself).
If you have received a DUI , OUI, or a DWI, then this will certainly be added to your insurance points. These are classed as ‘major violations’ and are often the longest lasting insurance points you can accumulate.
Getting a DUI or a DWI will also carry a lot of other implications, such as the requirement to file an SR-22 or pay higher insurance premiums. You may also lose your license for a short period of time.
NOT ALL STATES USE POINTS
While most states do use a variant of the points system, at present, there are nine states that don’t use it. These are:
LICENSE POINTS VS. INSURANCE POINTS
There is certainly an overlap between license points and insurance points, in that both are essentially a record of traffic violations.
However, insurance points represent a ‘soft’ version, in that they record your violations, but don’t have an impact on whether you can keep your license.
In states that use license points (which is most of them), regular transgressions will accrue license points that can then result in the temporary suspension of your license if you accumulate too many.
Insurance points don’t carry the same driving implications as license points, although they do have an impact on the cost of your premiums (as do license points). Either way, both are measures of driving transgressions, and both are best avoided for a variety of reasons.
HOW LONG DO THEY STAY ON MY RECORD?
How long your insurance points remain depends on three key factors:
The severity of the
The policy in your
Your insurance company will usually examine your record for the previous two or three years to see if you have any violations.
If your insurance company offers a ‘good driver discount’ then they may go back five years. If you are free from all violations in that time, you will be eligible.
As mentioned above, the severity of the transgression plays a major role in shaping how long it stays on your record. This makes intuitive sense – it is more important for your insurer to know you got a DUI three years ago than to know you couldn’t produce your insurance papers at a traffic stop three years ago.
As a general rule of thumb, unless your violation was for careless driving or a DUI, then it will most likely stay on your record for two or three years. You should see your premiums drop after that point.
HOW TO FIND YOUR POINTS
The best way to find out the status of your insurance points is through your state’s DMV. Most states allow you to access your driving record through their website at no cost. Have a look at what is listed on the record.
If any of the information is incorrect, then you should report it immediately to the DMV (as well as your insurance company). Having incorrect violations removed will decrease your insurance premiums.
You can also access your driving record through a third-party private company. The upside of doing this is that they will often be able to process the information for you more quickly than your own state’s DMV (particularly if your state does not allow you to check online).
The downside of this approach is that it will cost additional money, and it will also carry a risk since you’ll be required to share your social security number and driver’s license number with a private company. It is therefore strongly recommended that you use your state DMV wherever possible.
HOW TO REMOVE POINTS
In some instances, depending on the state and your transgression, you may be able to remove insurance points from your driving record by taking an approved driving course.
These courses are usually based on teaching safe driving practices and can either remove points from your record or prevent them from going on in the first place. Where possible, you should take this option.
As mentioned above, points are eventually expunged from your record over time. Therefore, regardless of the violation, just waiting will result in the points being removed. However, this runs the risk of allowing time for more points to build up,
so you should also take active steps to improve your driving in the interim.
Insurance companies are more commonly offering violation forgiveness policies. These programs work by adding a small amount to your premium and guaranteeing no rate increase in the instance that you receive a minor traffic violation.
These policies can be extremely cost effective for drivers who regularly get traffic violations, as the average rate increase is usually less than $5 per month for violation forgiveness.
This won’t remove points, but will effectively negate their impact on your insurance premiums. You won’t be free to accrue as many as you like, and nor should you risk a major violation, but it will mitigate the impact of insurance points.
Insurance points are something of an opaque process. It is never clear exactly how insurance companies factor them into the calculations of your insurance premiums, and nor is it precisely clear how far back they go when working out your driving history.
However, some things are constant: it is better to not have violations on your record.
However, being savvy about the situation is the best way to mitigate any problems.
Licensed Insurance AgentCynthia Lanctot