How Points Affect Your Car Insurance Rates
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by: tdd1984
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When determining your auto insurance rates and when trying to decide whether or not they will provide you with coverage, your insurance company will take a look at your driving record. One of the things they will consider when looking at your driving record are the points you have accumulated on your record. Determining the effect these points will have on your rates, however, involves considering a number of different factors.
Understanding the Points System
Most states utilize a points system in order to keep track of driving infractions. In most cases, each type of infraction receives a specific number of points. If you are found guilty of making a certain type of infraction, the proper number of points are assigned to your driving record. The more points you acquire on your record, the worse your driving record becomes. Insurance companies generally have the right to review your record and your points so they can determine if you are eligible for coverage and, if you are, they use the points to determine your risk potential.
Determining Your Risk Potential
By looking at the points on your driving record, insurance companies can determine your risk potential. Your risk potential has a direct effect on the cost of your insurance premiums. At the same time, your points do not necessarily have a direct impact on your insurance rates. This is because each company utilizes its own unique method for determining our risk potential.
Even after you receive coverage from an insurance company, the company may review your driving record at a later time and increase or decrease your insurance rates according to your record. Generally, insurance companies only review records one or two times per year.
Knowing When Your Record Will Be Reviewed
Although insurance companies may check into your driving record at any time, there are certain circumstances during which companies are most likely to review your record. Obviously, when you first apply for coverage, the company is likely to review your record. If you request a change to your policy, such as an increase in coverage, the company is also likely to review your record again. Similarly, when you add a vehicle to your policy or make changes to your vehicles, the company may review your driving record in order to determine the proper premium fee. When your policy comes up for renewal, your rates may also go up or down after the company reviews your driving record.
Many insurance companies utilize a system that is based on the Insurance Services Office’s Safe Driver Insurance Plan to help them determine rates. This system assigns a points value ranging from zero to four points for various types of infractions, with the points being determined by the severity of the infraction. Not all companies use this system, however, so you should be certain to ask your insurance company to explain its system if you are curious how your insurance rates are determined.
About the Author
Shannon Kietzman is a freelance writer and an authority on car insurance issues. She helps others learn the basics of car insurance so they can make proper and informed decisions when choosing the coverage that is right for them.
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