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How DMV Points & Auto Insurance Rates Work
Department of Motor Vehicles license points adversely affect your auto insurance rates so it is important to understand how they work. DMV points can be assessed for a number of reasons and every insurance company gives different weighting to your driving record when determining your insurance rates but having a basic understanding of DMV points can be helpful.
What Is a DMV Point?
DMV points are used by the state DMV to keep track of driver infractions. Points are assessed for each traffic violation that a driver incurs. Each infraction carries a different number of points. DMV points vary by state so it is important to check with your local DMV as to how points are assessed. As an example a simple a speeding ticket may only result in two license points while something more serious like driving under the influence may result in 12 points. If you receive a certain number of points within a given timeframe, it will often result in the loss of your license and/or serious restrictions. The number of points required for suspension varies by state.
DMV’s are state-operated; there is no federal oversight, so points vary by state. Some states do not assess points at all.
How It Affects Your Insurance
Insurance companies use DMV points to rate risk with each driver. The more points you have on your license the higher your premiums will be and in the case of a large number of points or suspension of your license it is possible that your insurance company could drop you. If you receive a ticket, your insurance rates will more than likely rise. The increase varies depending on your insurance company and how they take account for points. Insurance companies usually pull DMV records once a year so the increase may not take effect immediately upon receiving the ticket but eventually it will catch up with you.
Clearing Points
Points stay on your license usually for three years, depending on your location. Some states allow you to take a defensive driving course to prevent the points from small offenses such as speeding tickets from going on your record. The savings on your insurance premiums will more then cover the cost of the class.
Alternatively, insurance rates may increase even when you’ve had a perfectly good driving record for years. There are several reasons why this happens, many of which are not the driver’s fault. Here are some of those reasons, and why they cause your auto insurance rates to increase.
Credit Score
Your credit score is has a big influence on what kind of auto insurance rates you get. A low credit score equals high auto insurance rates. Call around for a payment comparison for the best insurance rates.
Age
Certain age groups are considered high risk, and will have high rates; usually the younger the driver, the higher the insurance rates. The 40-50 age group will generally have lower rates.
Location
Location makes a big difference in auto insurance rates. If the town where you live has a high crime rate, expect to pay higher insurance rates. If you live in a low crime rural area, chances are good that you will pay lower rates. High crime areas mean more vehicles are stolen, which raises insurance claims. This in turn is passed on to the consumer, in the form of higher insurance rates. The same is true if you live in a high population area. The more people on the road, the more chances there are for accidents. More accidents mean more insurance claims, which go on to the consumer in the form of higher rates.
Buying a Newer Vehicle
A newer vehicle can mean higher auto insurance rates. Newer cars that are more valuable are more likely to get stolen, so the auto insurance rates go up. Thus, if a newer auto is involved in an accident, the cost of repair will be higher, which also raises the auto insurance rates.
Coverage Gaps
Not only does insurance protect the driver, but it also protects those in other cars. Sometimes bad things happen to good people and your insurance gets dropped or canceled. With a gap in coverage on your record, it’s harder to get auto insurance. Sometimes a gap can occur in your insurance because of one of the above reasons. If you don’t meet renewal requirement, your insurance could be canceled, which can result in a coverage gap.
