What Are 'Points' And How Do They Affect My Insurance Rates?
On your insurance record, every event that happens is assigned a point value. Points are assigned for infractions such as moving violations, at-fault collisions, driving under the influence and parking tickets. When you are found guilty for one of these types of infractions, these points are added to your driving record—the less points you have, the better your driving record is.
Each insurance company weighs applicants differently, but chances are that your driving record will have an impact on your insurance rates. If you have a lot of points, your insurance rate will be higher because you are seen as more of a risk for insurance claims.
A point system assigns a point value to each type of infraction. An example of a point value rating system looks like this:
At fault accident—2 points for first occurrence, 3 points for second occurrence and 3points for each one thereafter.
Driving under the influence—1 point for first occurrence, 2 points for second occurrence and 3 points for each one thereafter.
Major violation—4 points for each occurrence.
Minor violation—2 points for first occurrence, 1 point for second occurrence and 1 point for each one thereafter.
Speeding—3 points for first occurrence, 2 points for second occurrence and 2 points for each one thereafter.
No charge violation—0 points for each occurrence.
Not at fault collision—0 points for each occurrence.
Each insurance company will assign their own point value for each infraction and typically their own dollar amount for each point that you have for your rates to rise. Most often, your first infraction, such as a collision, won't impact your rates too much, although if you've filed a claim on your insurance you can expect your rates to rise slightly. The more you claim on your insurance, the more expensive your rates will be. However, a major violation can see your rates rise 26 per cent above their current rate.
The insurance companies mostly use point systems to help them calculate their premiums, but other factors are still involved in the cost of your insurance, such as your age, gender, marital status, the type of vehicle you drive, the use of the vehicle and even your credit history. Your driving record will have an impact on your insurance rates, which is why it’s much more beneficial to prove yourself a safe driver. Several violations can double your current insurance rates, which could mean that you can no longer afford them for the car you are driving.
You can get a copy of your driver's abstract from the local Department of Motor Vehicles branch in your area for a small fee. The insurance company will pull your driver's abstract when you apply for insurance and will typically pull a new one at renewal of your insurance. It's best to be up front and honest with your insurance company when you have been issued a violation or at fault accident, they will find out eventually and your failure to alert them to the change in your driver's abstract can mean the insurance company will cancel or void your insurance policy.