How Your Driving Record Impacts Your Auto Insurance Rates

How Your Driving Record Impacts Your Auto Insurance Rates

When determining your auto insurance rates and how much you’re going to pay, there are a multitude of factors that companies use when deciding what they’re going to charge you.

Although it would be nice, nobody simply gets the rate presented by the insurance company. These companies use a variety of methods to determine what they’re going to bill you. When determining factors for an estimate, the driving record is one of the most important factors.

These estimates are not binding in any way, but rather a gauge of the company’s estimate of your overall driving factor. When insurance companies look at drivers, the first thing with the most weight affecting their decision is them examining their driving record.

But how do insurance companies examine your driving record? What exactly do they look at, and what are they searching for and looking at? Finally, what actions can someone take to help reduce their driving rates?

Factors Considered in Auto Insurance Rates

Here are some important factors that affect your car insurance rates:

1. Driving Record

Car insurance companies check a driver’s driving record with the Department of Motor Vehicles to assess their risk level.

With this information in front of them, car insurance companies can then determine what kind of hit will need to be taken on the kind of coverage a particular customer will need. The more blemishes on a person’s record, the more expensive their monthly premium is going to be.

Of the offenses that can occur on the road, a car crash appears to be the number one indicator of whether a person is going to be a high-risk driver.

According to the Department of Motor Vehicles, most drivers that are involved in a serious crash will then go on to be involved in another crash only a couple of years later.

2. Age and Experience

Young people are more likely to be involved in fatal car accidents because they’re still learning to drive. In fact, the chance of a crash where a teenage driver is at fault is four times higher than for someone over 20 years old.

Men tend to be at a higher risk than women when it comes to car accidents. Also, as people gain more experience behind the wheel, they tend to have fewer crashes.

In fact, the crash rate for an experienced driver is about 30 to 40 percent lower than for someone who’s just starting to drive.

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For other age groups, the highest risk of a crash is typically between ages 21 and 30. For those under 21, there is still a large difference in auto insurance rates between one age and the next.

3. Vehicle Type

If you are driving a sporty car or one with a powerful engine, be prepared to pay more for your insurance. Sport vehicle brands tend to attract higher auto insurance premiums due to the fact that, statistically, these flashy cars are more susceptible to theft, vandalism, and accidents.

Additionally, many auto insurance companies also consider smaller, fuel-efficient cars to be riskier than their larger counterparts and may charge accordingly.

They justify this by arguing that smaller cars, which offer less protection in an accident, are more likely to result in high claims compared to larger vehicles.

The same concept holds for two-door versus four-door models, as well as convertibles and regular cars.

Therefore, when shopping for a new car, do some research on the makes and models you are interested in and make sure to note their impact on your auto insurance before you commit to a purchase.

4. Personal Mileage

You may have noticed that the more you drive, the higher your auto insurance costs become. This is because there is a direct relationship between the time you spend driving and the likelihood of an accident while you are behind the wheel. 

People who cover more miles are more susceptible to accidents and thus may be required to pay higher premiums. 

Additionally, people often do not learn or remember what they were taught, and this includes driving skills. Therefore, the more you drive, the more likely it is that you will become a dangerous driver.

Some states have given insurance companies permission to use additional factors such as where you live, work, various driving skills, and how often you use your vehicle for purposes other than driving.

The Impact of a Clean Driving Record

Here are some impacts of a clean driving record on your insurance rates:

  • Lower premiums with no accidents or violations.
  • Eligible for safe driver discounts and rewards.
  • Demonstrates responsibility and reduces perceived risk.
  • Builds trust with insurance companies over time.
  • Potential for better coverage options and rates.
  • Avoids surcharges or penalties for incidents.
  • Reflects positively on overall financial responsibility.

The Consequences of a Poor Driving Record

Having a poor driving record comes with some consequences. They include the following:

1. Increased Premiums

The potential for an increased premium is one of the most pressing concerns, and it is also one of the top reasons why you should aim to keep your driving record clean.

When you win the “good driver” discount with most insurers, your premium will increase. This increase can be substantial. It is also an increase that will be tough to settle if you have a spotty driving history.

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For many drivers, the insurance increase that comes after a ticket or an accident is enough to make driving a financial burden. Other drivers are even priced off the road.

You could be faced with a dangerous decision: to maintain your car insurance or to take a risk by driving without it.

2. Policy Cancellations

Policy cancellations respond in a logical and predictable way. The greater the number of chargeable violations issued or heard during the previous policy period, the greater the likelihood of policy cancellation.

In fact, the maximum increases from 13.5 to 24.6 points as the number of violations in the previous policy increases from 5 to 7 (66% increase) and from 48.8 to 366.3 points as the number of violations increases from 8 to 14 (649% increase).

3. Difficulty in Obtaining Coverage

On top of simply paying higher rates, the other major problem with traffic tickets is that too many of them can make it hard for you to find coverage. Insurance is all about underwriting.

When your insurance company looks at your driving record, they’re basically trying to predict the likelihood of you making a claim in the future.

Keep in mind that each ticket stays on your driving record for a certain number of years—three, five, or seven years. 

However, each insurance company also has its own set of underwriting rules for how many “chargeable” violations of a certain type it will allow a driver to have before the company will not accept an application for coverage from that driver. 

An underwriting rule of thumb you will frequently come across is that after three or more moving violation convictions in the past 36-month period, many insurance companies will decline to offer a preferred or standard policy.

In other words, with three or more violations on your record, you’ll be “nonstandard.” Nonstandard coverage, of course, is more expensive.

Steps to Improve Your Driving Record

Here are some suggestions to help you restore your driving record to a more positive status sooner rather than later:

1. Defensive Driving Courses

Taking defensive driving courses can make you a better driver and might even reduce your insurance costs. Remember the tips you learn in these courses when you’re driving every day, and always prioritize safety on the road.

You may not think a single moving violation is worth lowering your insurance premium, but insurance companies may increase your insurance rate because of it.

One way to save on insurance costs and prevent your long-term record from being marred by a ticket is to go to traffic school to improve your driving knowledge and skills.

2. Following Traffic Laws and Regulations

It is pretty straightforward: traffic laws and regulations provide guidelines on how to drive and cover safety aspects for all road participants.

Good drivers always pay attention to traffic signs and signals and obey speed limits. Moreover, it’s illegal to use a mobile device when driving in most states of the United States.

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Drivers are not allowed to use Pioneer’s motorized in-dash car audio/video system while driving.

Contraventions can result in fines and penalties, and repeated offenses begin to add points to your record as well as increase your insurance premium.

3. Avoiding Distracted Driving

Every day, over 1,000 people get injured in crashes caused by distracted drivers. Most of them are distracted by using their phones to make calls or send text messages while driving.

Sending a text message takes, on average five seconds. If you’re driving at 55 miles per hour, that’s long enough for your vehicle to move around the length of a football field without you watching the road.

All of these facts about distracted driving are stated on the official U.S. government website for distracted driving. It only takes one brief moment of distracted driving for you to get into an accident, making it especially important to always stay focused while driving.

No matter your driving record or current auto insurance rates, distracted driving is never okay.

So next time you get behind the wheel, push all distractions aside, and remember to always keep your eyes on the road. Not only will you be keeping yourself safe, but you will also be keeping your insurance record clean for when it is time to renew your policy.

4. Speeding Tickets

Surely, speeding tickets affect auto insurance rates. Insurance companies almost always penalize this type of offense. The relationship between speeding and insurance risk is well established.

Speeding substantially increases the risk you pose to others and yourself. Why would an insurance company reward you with low rates if you have a number of them? The more severe your violation, the more severe the penalties for you. 

While it is always best not to commit these types of infractions, your best option to avoid these higher insurance costs is to contest the ticket and eliminate it from your driving record. 

Getting your day in court and contesting a ticket is a legal right and often raises doubts about whether or not you committed the violation.

5. Regular Vehicle Maintenance

A properly maintained vehicle is always more fuel efficient and has fewer to no pollutants exiting the exhaust tailpipe, which will also help you avoid accidents. 

This attention to maintaining a healthy vehicle is directly reflected in what you spend at the gas station and also in other related costs.

Examples of regular maintenance include oil changes, tire balancing, and replacements of air filters. In general, repairs to your vehicle, such as tune-ups and gear oil changes, can, together, save up to 20% of your vehicle’s fuel consumption.

Conclusion: How Your Driving Record Impacts Your Auto Insurance Rates

When you apply for auto insurance, the car insurance company will check your car insurance record to see if they believe you are a good candidate for coverage.

If you have numerous car insurance claims, accidents on your car insurance report, or any serious offenses on your driving record, you may become a high-risk driver. You might either be turned down by the insurance company or have your car insurance rates raised. 

Usually, an applicant with an accumulation of 6 or more penalty points within a period of 3 years may be declined or have their premiums increased. An incident with a fatality charge has the possibility of maximum rates.

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