Assessing Premiums: The Importance of Your Driving Record

Your driving record is a key part of how your insurance company will assess your premiums. They normally get a copy of your driving record from your state’s motor vehicle department. Then, they will use your driving record as part of how they assess you for insurance, under their underwriting rules. Since your driving record can have a direct impact on how much you pay, it is essential to keep your record as clean as possible.

What is the Point-rating System?

Generally, the motor vehicles department has a point-rating system, which they use to track your driving record. Under the typical point system, each type of infraction, including moving violations, parking tickets, at-fault accidents, and DUIs, are assigned a certain point value. When you are found guilty of one of these infractions, the appropriate number of points is added to your driving record. According to Help with Traffic Tickets DMV, some examples of the one-point system include the following:

• Speeding
• Running a red light
• Making an unsafe lane change
• Having an at-fault accident

Some examples of the two-point system include the following:

• Wet and reckless driving
• DUIs
• Driving with a suspended or revoked license
• Speeding over 100 miles per hour

Underwriting Guidelines for Evaluating Prospective Clients

Underwriting guidelines plays an important role for insurance providers, agents, and potential clients. These guidelines are a set of rules used to make specific decisions regarding acceptance or rejection of prospective clients. Your driving record can affect these guidelines in the following ways:

• Typically, an auto insurance company has the right to review the driving record of anyone who applies for an auto insurance policy from that company.
• They do this to determine whether you meet their guidelines for insurance and are eligible for a policy under their guidelines, and to assess your risk potential to them — affecting how much you will pay.
• Every insurer has unique underwriting guidelines for evaluating prospective clients. As a result, the points on your record may have a more significant impact with one insurer versus another. As always, it pays to shop around.

Once you have insurance with a particular company, your insurer likely has the right to review your driving record. Some insurers will review your record very regularly; they may review as often as once a year on your policy renewal date. Other insurers may be less diligent. There are, however, certain times when you can be relatively sure an insurance company will be checking your record. These include, when you initially apply for coverage; when you request a change to your policy, such as an increase in coverage; and when you add a vehicle to your policy or change vehicles.

Sources:

1. Points on Your License and California DMV Point System, Help with Traffic Tickets.