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How Do Points and Penalties Affect Your Insurance Rates?

If you've never had points or penalties, you probably aren't aware of how they affect your auto insurance rates. Unfortunately, even a small point for something that seems unimportant can drive the costs of premiums through the roof. Below, we'll discuss points and penalties and how they affect your insurance rates.

What are Traffic Points?

When someone gets stopped or fined for a traffic violation, they typically accumulate some points. While the number of points differs, the usual number is between two and five for common traffic violations like running a red light or failing to yield. These points go on your permanent driving record and with enough points, you can get your license privileges revoked.

When you receive traffic points, it often makes your premiums rise. The reason you end up paying more is because your insurance company starts to see you as a liability. If you're driving recklessly enough to get moving violations, chances are you're driving recklessly enough to cause an accident. The insurance company wants to get as much money from you as possible before they end up having to pay money out for a claim.

How High Do Premiums Get Raised?

The amount your insurance premiums are raised with each point or penalty depends on which company you have. It could be anywhere from thirty dollars each month to hundreds of dollars each month. Contact your insurance company and ask about the premiums and the affect points or penalties have on them.

You should know that drivers without points or penalties can often get "safe driver" rewards and discounts – so there's definitely an incentive to drive safely and avoid points and penalties. Research your insurance policy as well as what causes premiums to be raised so you'll know what to expect if you receive points or penalties.

Posted on 11.13.2009 by zippy