How Do Points Affect Insurance?

Points affect your insurance premium and rates. Higher points and violations can make you a high-risk driver in the eyes of your insurance company.

Car insurance providers catalog customers’ driving records, including offenses and license points, for rate calculation purposes.

This article walks you through the different aspects of points on your license system to help you determine how points affect your insurance and other impacts of points.

What Are Points On License?

Points on license are records of your driving habit that keep track of your traffic violations, offenses, and infractions. Universally, points are a bad thing on your license because they determine whether you are a good driver, how risky you are as a driver, and whether you should continue driving.

Most states in the U.S., including Arizona, have a points system, usually correlated to the following traffic and driving offenses:

  • Infractions
  • Moving violations
  • Collisions

Each state has its regulation on license points guided by laws and principles and has predetermined fines and punishments.

Points on license allow states and insurers to punish drivers who commit regular traffic offenses and infractions. In addition, they help to incentivize young drivers to obey the traffic laws and avoid risky driving.

Typically, points eventually disappear from your record and license. But how long this takes to occur depends on the seriousness of your violations, state laws, and traffic requirements.

Types Of Points On License

While state Motor Vehicle Departments record and keep drivers points, insurance companies also use point systems to track traffic offenses such as speeding tickets and other violations.

There are two types of points on license:

  • State Motor Vehicle department points on license. The DMV points are also called license points
  • Insurance points on license

These two points have separate assessments. You get DMV points on your license when you are convicted of certain traffic violations. Infractions are used to determine your fines or punishments.

Insurers don’t generally use or pay attention to DMV points but calculate their own points, based on your traffic offenses and tickets, to determine your rates.

Licence Points Vs.Insurance Points And How They Work

Insurers don’t generally use or pay much attention to DMV points. So, what is the difference between license points and insurance, and how does each work?

License Points (DMV Points)

License points are what the police or courts give you as a result of driving infractions and traffic violations. Traffic violations that can lead to license points include:

  • At-fault collision
  • Speeding violation
  • Illegal turns
  • Texting while driving
  • Driving under the influence (DUI)
  • Driving While Impaired (DWI)
  • Reckless driving

DMV points on your license stay on your driving record, add up, and your state’s DMV monitors them to determine if you should continue driving or what penalty to impose on you. So, piling up driver’s license points can cost you money, and sometimes even your license.

Generally, the more points you have on your license, the worse off you are as a driver. The DMV will deem you a risky driver and impose penalties on your license such as:

  • Fines, tickets, and court fees
  • Loss of driving privileges
  • A suspended license, and sometimes the license can be revoked
  • A safe driving course
  • Community service
  • A combination of some of the penalties

Different states issue license points based on the state’s traffic laws and requirements. Not all states use points. For example, in some states, serious violations like DUI/DWI mean an automatic license suspension without DMV points being given.

In addition, each state also has its own rules about how many points each traffic offense can garner and how many can be on your driver’s license before action is taken. If you’ve garnered points on your record, you can check how many points you have from your DMV’s office.

Insurance Points

Insurance points on license, by contrast, are those which your insurance company monitors, based on your DMV driving record.

It is a measure of how much of a risk you are to the insurance company or how the insurers perceive your risk level.

Insurance points differ from one insurance company to another, but they all have the same purpose and are in accordance with the guidelines of the Insurance Services Office (ISO).

Insurers use insurance points to keep track of your driving record and dictate your rates and premiums. But they don’t make the points public, and you won’t easily know how much a particular driving violation impacts your premiums rates.

Typically, the more serious your driving offense or infarction is, the more points your insurance provider will add to your insurance record. For instance, while a speeding ticket could only be one point, a DUI or reckless driving could add up to six points.

The more insurance points you accumulate, the more likely your insurance rates and premiums will be high. Once you reach a given point threshold, which varies by insurer, your policy is surcharged to reflect your risk level.

How Do Points Affect Insurance Rates?

Although each insurance company follows its own point system, points, infractions, and claims will lead to elevated insurance costs.

Insurers use insurance points to determine your insurance rates and not license (DMV) points.

So, here is what happens:

Insurance companies use your driving history and DMV driving record to calculate your rates. If you have accumulated license points and a bad driving history, your insurance premiums will increase, and your policy can be expensive until the points are dropped out of your record.

Usually, DMV license points won’t cause your car insurance rates to go up directly. But still, the DMV points are closely related to insurance points, and insurers use them together to determine your insurance rates.

Anything that causes your state’s DMV to add points to your driving record will directly cause your insurance provider to add points to your insurance history and record. The insurance points eventually lead to a premium increase until they’re dropped off your license and insurance records.

How long points stay on your record depends on your state. In many states, points on your license can last for two or three years. But in some states, points can last up to eight to ten years. In Arizona, for example, points can stay on your record for up to 3 years.

Do I Need To Tell My Insurance Provider If I Get Points?

You do not have to inform your insurance provider about tickets legally. But the insurer will find out regardless.

Car insurance companies have access to data reports available such as your Motor Vehicle Record (MVR) and Comprehensive Loss Underwriting Exchange report (C.L.U.E). These reports will tell them about your tickets and other traffic violations.

But they don’t review these documents until your next policy renewal or when you switch providers. So, your license points will not be added to your insurance record until your next insurance renewal.

Final Word

Tickets, infractions, and traffic violations will add points to your driving record. Every DMV record impacts your insurance record. Insurers use DMV records and in addition to their records about your driving to determine your insurance points. These insurance points then form the basis of your premiums calculations alongside other premium determinants.