{"id":5224,"date":"2023-11-13T10:00:00","date_gmt":"2023-11-13T10:00:00","guid":{"rendered":"https:\/\/businessyield.com\/ins\/?p=5224"},"modified":"2023-11-13T01:05:29","modified_gmt":"2023-11-13T01:05:29","slug":"insurance-points-what-are-they-how-do-they-work","status":"publish","type":"post","link":"https:\/\/businessyield.com\/ins\/insurance-guide\/insurance-points-what-are-they-how-do-they-work\/","title":{"rendered":"Insurance Points: What Are They & How Do They Work?"},"content":{"rendered":"

Most insurance companies have implemented surcharges for moving violations and at-fault accidents, which some call \u201cinsurance points\u201d. Insurance points may also be known as \u201caccident- or violation-related premium increases or surcharges\u201d. Your insurance premium is the amount you pay annually for your insurance policy.<\/p>

In some states, you may be turned down for insurance or face non-renewal if you have too many \u201celigibility points\u201d for traffic violations.<\/p>

Understanding how insurance points work<\/strong><\/span><\/h2>

Insurance points are given to drivers who have driving violations or offenses. These points are handed out by the Department of Motor Vehicles. The point system may differ slightly, or even greatly, from state to state. <\/p>

You can only get a certain amount of points on your license at a time. Most states are around 11 points total, which can usually be a couple of “minor offenses.” Some actions are major offenses that bypass points and suspend your license. Typically, drivers who lose their licenses with point problems are those who accumulate points over time and don’t get them reduced. <\/p>

The auto insurance point system is an important tool for insurance companies to determine how much to raise your rates because it shows poor driving. In most states, points are typically held on your driving record in the three to five-year range.<\/p>

Insurance points are a vital part of the calculation of auto insurance rates. These points are an indicator of your driving risk based on your driving history. However, because insurance companies are reluctant to discuss calculations, the nature of the insurance points system can be difficult to determine. <\/p>

Car insurance point system<\/strong><\/span><\/h2>

Most point systems insurers use are proprietary, so they can vary dramatically by insurance company. However, many insurance carriers use the system based on the Insurance Services Office (ISO) guidelines.<\/p>

Insurers assign points to your insurance record for issues such as speeding tickets and other infractions, but they also ding you for claims. Once your point total hits a specific threshold, your premium will be \u201csurcharged.\u201d In other words, your rates are headed up. If your point total gets too high, you may be dropped altogether.<\/p>

For example, if your insurance company assigns three points for a speeding ticket for 10 mph over the limit and 2 points if you are caught running a red light, your insurance record will have 5 points on it. Insurance companies have surcharge schedules that detail the rate increase for various point totals. If their surcharge schedule indicates that a driver with 5 points would be surcharged 1.25, your rate is headed up 25% until the tickets fall off of your driving record, which will usually take three years.<\/p>

Insurance points are used to assess your eligibility for auto insurance coverage and for the calculation of rates. In many cases, the impact of insurance points lessens over time. As time passes, if you keep your driving record clean and don\u2019t file any claims, the insurance points on your record could be reduced, leading to a lower premium.<\/p>

It is always possible to see the specifics of your insurance carrier\u2019s rating system. Contact your insurance agent or your state\u2019s insurance regulatory body and request your insurer\u2019s surcharge schedule. All insurance companies must file their rates with the state insurance regulators.<\/p>

How do insurance points affect premiums?<\/strong><\/span><\/h2>

When it\u2019s time to\u00a0renew your policy, your insurance company will likely pull the driving record of all insured drivers listed on your policy. A driving record includes all driver\u2019s license issuances, renewals, violations, points, accidents, suspensions, and other related occurrences.\u00a0<\/p>

At that time, the insurer will consider what type of moving violations you might have picked up. These include speeding or an at-fault accident, along with\u00a0any claims\u00a0you made, such as repairs for a parking lot fender-bender. Based on the severity of the violation or accident, your insurance premiums could increase accordingly.\u00a0<\/p>

How do I find out how many insurance points I have?<\/strong><\/span><\/h2>

You can ask your\u00a0insurance agent\u00a0about any surcharges or points applied to your premium and what information was obtained, to quantify the additional charges. The agent can also tell you how long the surcharge will apply. <\/p>

Insurance points typically stay on your insurance policy until they roll off of your driving record after a certain period of time. At-fault accidents remain on a driver\u2019s insurance record for varying lengths of time, typically also two to three years.<\/p>

Which violations have the biggest effects?<\/strong><\/span><\/h2>

Violations and insurance points vary by state and insurer. Flannagan notes that your rates might go up by 10% for a speeding ticket, or even to 100% for a DUI. Let\u2019s look at an example: North Carolina has created a Safe Driver Incentive Plan (SDIP) and assesses SDIP points, which increase your insurance premium by a set percentage. <\/p>

Here\u2019s the impact it would have on an $800-per-year policy.<\/p>

Violation<\/strong><\/td>Safe Driver Insurance Plan Points<\/strong><\/td>Percent Increase<\/strong><\/td>Post-Violation Annual Insurance Rate<\/strong><\/td><\/tr>
Speeding up to 10 mph over the limit in a speed limit zone under 55 mph<\/td>1<\/td>30%<\/td>$1,040<\/td><\/tr>
Hit-and-run resulting in property damage only<\/td>4<\/td>80%<\/td>$1,440<\/td><\/tr>
Highway racing or knowingly lending a motor vehicle for highway racing<\/td>10<\/td>260% <\/td>$2,880<\/td><\/tr>
Driving with a blood-alcohol level of 0.08 or higher <\/td>12<\/td>340% <\/td>$3,520 <\/td><\/tr><\/tbody><\/table><\/figure>

What happens when you get points on your license?<\/strong><\/h2>

It will vary depending on the state you live in. However, in most cases, the only significant impact of a few points on your license is more expensive insurance. If you get a speeding ticket, you can expect your insurance rates to go up, but that should be the only significant consequence of the points.<\/p>

However, the pain will be much more severe if you end up with numerous tickets in a short time or a significant traffic infraction on your record. You could end up with a suspended license, significant fines and even jail time.<\/p>

For example, in California, points ranging from zero to three are assigned based on the severity of an offense. Most minor offenses like speeding will result in one point on your license. Your license will be suspended for six months, and you\u2019ll be on probation for a year if you get the following:<\/p>