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Do insurers charge for each point on your license?


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Question: Do you have a fee added to your insurance policy for each point on your driver’s license, or is a flat fee charged onto the auto insurance premium? 

Answer:  Car insurance companies don’t add a fee for each point on your driver's license  or charge a flat fee. Instead, they calculate their own insurance points based on all of the violations and accidents you have accumulated on your motor vehicle record (MVR) within a certain period -- normally three years -- and add a surcharge based on this to your rates.

Insurance points don’t typically match up with the points your department of motor vehicles (DMV) uses to determine if it should suspend your license or force you to take a driver improvement class.  (See “Is there a difference between insurance points and license points?”)

To complicate matters further, each auto insurance company usually creates its own points system and accompanying surcharges.   So, with one company, running a red light could be two insurance points and a surcharge of 10 percent. With another company, the same offense could be one insurance point but a surcharge of 15 percent. Some auto insurance providers don’t add insurance points or surcharge drivers for one minor violation. 

The widely varying methods of calculating rates make it all the more important to comparison shop for car insurance. Your particular combination of risk factors could cost hundreds, even thousands less at another company. (See “12 ways to double-check your savings.”)

In general, the more serious the offense, the more insurance points you’ll receive. The higher your points total, the greater the risk you pose to an auto insurer, which will be reflected in a higher surcharge.  

Some states have their own surcharge programs. For instance, North Carolina has its safe driver incentive plan (SDIP) that insurers follow. Drivers in this state can check the SDIP schedule to see how insurance points will affect their annual auto insurance premiums. 

Some states require auto insurance company to give policyholders a copy of their surcharge schedule, so review your insurance documents to see if you have the list and can calculate how much items on your MVR are costing you in insurance premiums.

If you don’t have the list or want to know more about your specific carrier’s use of insurance points in connection with your car insurance rates, contact your insurance provider directly.

Insurance points and other rating factors decide your car insurance premium, and since each insurance company varies on these items it’s important to shop around for auto insurance – especially when you have violations or accident on your driving record. And remember to ask for discounts that you may be eligible for. (See "Your guide to car insurance discounts")

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