How Do Points Affect Auto Insurance Rates?

Auto insurance rates are affected by a number of variables, including your credit history, the type of vehicle insured and more. The higher the risk you show of filing a future claim, the higher your auto insurance rates will be. When you receive (or lose) points from a traffic law violation, then you are automatically classified as a higher risk driver than someone without points.

The confusion about points, however, is that auto insurance companies use an “insurance score” to determine your risk level and not just points issued by the DMV. Points are only one variable which can adversely affect the cost of auto insurance.

What Are Driver’s License Points?

Whenever you are ticketed for a violation of traffic laws, you most often will receive points. While parking tickets and some minor infractions may not penalize you with points, almost any moving violation will. All states have different laws on how many points a driver can accumulate before penalties kick in. No matter where you live, getting a ticket is never a good idea.

The point system was established to create a safer environment and penalize high-risk drivers who repeatedly break traffic laws. You almost will never lose your license from a single ticket unless it involves serious charges. However, if you continue to defy the law of gravity in your vehicle, and pretend the highway is a practice track for your imaginary Nascar team, you will be left riding a bicycle to work one day.

What Are the Insurance Company Points?

Insurance points are different than DMV points. Points issued by the DMV go against your driving privileges. Auto insurance companies use a formula that includes DMV points as just one part of the overall risk profile. For example, when you file a claim or pay late, your insurance score may drop in addition to the score change when points are earned from a traffic ticket. Of course, none of these items are good, and your auto insurance rates can change regardless if you have points on your driver’s license or not.

Where Can I Find My Insurance Score?

Auto insurance companies use an insurance score based on typical FICO credit-based scoring to help predict loss. You can learn more about this score at nsurancescore.com; however, this is not the final predictor for how much you will pay. All auto insurance companies have different and complex formulas for calculating your final premiums, and the insurance score is just one of them. It does pay to learn more about how the insurance score works. Just like your credit score, the way private companies apply, it can be very different from one provider to the next.

Will Attending Traffic School Keep Points of My Record and Keep My Auto Insurance Rates Down?

Many people have an option to attend driving school when they get a traffic ticket, and this can be beneficial for keeping points off your record. However, the urban legend of how attending traffic school will also keep auto insurance rates low is that urban legend.

DMV points are not directly associated with how much you pay in auto insurance. The insurance company does provide a snapshot of your driving record. Auto insurance companies also look at your driving record as a whole and not just the number of points you have. Even drivers who have been ticketed for speeding but choose traffic school as an option can still end up with higher auto insurance rates at renewal time. The only way to safeguard against higher auto insurance is to obey traffic laws.