Your driving record is an essential factor that determines your auto insurance rates. While auto insurance companies look at a wide range of factors to determine their rates, a bad driving record can make your premium very expensive.
But exactly how does your driving record affect the rates, and what constitutes a bad driving record? Thankfully we have all the answers here. By the end, you should have clarity on just how much your driving record will affect your rates. Read on to find out more!
What are Insurance Points?
Insurance points are a system used by insurance companies to evaluate drivers’ risk and determine their rates.
Insurance points are assigned based on specific traffic violations and accidents. Each traffic violation corresponds to a certain number of points. The more points you accumulate, the higher your insurance rates will be.
For example, a minor traffic violation will have one insurance point, while a major accident could give you six or more points. These points remain on your driving record for two years, and the insurance company will take them into account when determining your rates.
Your Driving Record and Insurance Rates
Your driving record is one of the most significant factors that determine your auto insurance rates. If you have a clean driving record with no traffic violations, you will likely receive lower rates than someone with a history of accidents and violations.
Insurance companies view drivers with a history of traffic violations or accidents as high-risk and therefore charge them higher rates.
We will look at two important and most common aspects of driving that will help you understand how insurance rates are affected. These are speeding and demerit points.
The Impact of Speeding on Insurance Rates
Your insurance company will find out about your speeding ticket, usually at renewal time. While a speeding ticket can cause your insurance rates to increase, other factors such as your age, driving history, and the specific insurance company you are with also count.
Each insurance company uses its own means of calculating your risk as a driver and setting insurance premiums. Speeding tickets stay on your driving record for three years, affecting your insurance premiums during that time.
For most minor speeding tickets, you can expect an increase in premiums between 0 and 10 percent for a single offence. If you have multiple speeding tickets, you may be considered a high-risk driver and could face significant increases in insurance rates.
A cancellation of your insurance policy could also happen. Serious speeding tickets can have much larger impacts on your insurance rates, often resulting in immediate license suspensions and rate increases of up to 25 percent.
Some insurance companies forgive a first minor conviction for safe drivers with clean records, while others do not. With too many speeding tickets, you may need to switch to a more expensive high-risk insurer or even sit in front of an official to explain why you should keep your driver’s license.
Demerit Points and Insurance Rates
Demerit point is another factor that affects your insurance rates. If you receive a ticket in Ontario, you may receive demerit points in addition to a fine.
They range from 2 points for minor convictions to 7 points for serious traffic convictions. The system encourages drivers to improve their behavior and protects people from drivers who abuse driving.
Demerit points do not directly affect your premiums. But, if there’s a conviction along with demerit points for speeding or stunt driving, it may result in increased insurance rates. While a single minor conviction generally has minimal impact, having multiple or major convictions will increase your costs.
Demerit Points Overview for G License
G-licensed or fully licensed drivers can accumulate max 15 demerit points. After that, their driver’s license is suspended. Here’s a breakdown to help you better understand,
If you accumulate 2 to 8 demerit points, you will receive a letter of warning.
If you accumulate 9 to 14 demerit points, your driver’s license could be suspended. You will have to attend a meeting with an official to discuss your driving. A $50 fee also applies for the meeting.
If you accumulate 15 or more demerit points, you will receive an automatic 30-day license suspension.
Demerit Points Overwiew for G1-G2 License
New or young drivers with a G1 or G2 license face different demerit point penalties. Here’s a breakdown to help you better understand,
If you accumulate 2 to 5 demerit points, MTO will send you a letter of warning.
If you accumulate 6 to 8 demerit points, your license could be suspended. You may need to attend an official meeting to discuss your driving. The $50 meeting fee applies.
If you accumulate 9 or more demerit points, your driver’s license will be automatically suspended for 60 days.
To reinstate your license, you will be required to take retake the driving test once the suspension period is over. After passing, the demerit points will be reduced to 7 for G license holders and 4 for G1-G2 license holders.
Your driving record is a significant factor that determines your auto insurance rates. Insurance companies use insurance points to assess drivers’ risk and determine their rates. Maintaining a clean driving record is the best way to keep your rates low.
Remember to follow traffic laws, attend traffic school if necessary, be a defensive driver, consider a telematics program, and compare insurance quotes to find the best rates for your coverage needs. By taking these steps, you can avoid insurance points and save money on your auto insurance.
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