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Auto Insurance

Moving Violations Cause Car Insurance Costs to Quadruple in Some States

My Finances Today — The speeding ticket you received in North Carolina is likely to cost more than if you had been caught driving over the speed limit in New York.

That’s because the increases for car insurance rates that stem from moving violations vary significantly by state. According to a recent insuranceQuotes.com study North Carolina topped the list for highest rate increase for over half of the violations the study researched, while New York showed the lowest percentage increase consistently.

On average, the most expensive infractions on a national basis are DUI with a 92% increase, reckless driving with an 83% jump and speeding 31 miles per hour or more at a 29% increase. The least expensive violations include not wearing a seatbelt with only a 6% increase, driving without a license with a 16% rise and violating railroad rules with an 18% increase.

Drivers who receive a DUI charge will pay an average of 92% more for car insurance on a national basis. North Carolina residents will be hit much harder with an increase of 337%, while drivers in Maryland will only see a 15% increase for this violation. In Hawaii, drivers charged with reckless driving will see costs rise 287%, which is significantly higher than the national average of 83%, and residents of Arkansas will see 24% increase for the same offense.

Even small infractions vary greatly across states. Driving without a license in Maryland will increase your cost by 95% compared to no increase at all in Rhode Island.

Mitigating the Damage

“Most consumers are unaware of how much insurance rates go up even for a minor traffic violation, such as speeding a few miles over the posted limit,” said Laura Adams, a senior analyst at insuranceQuotes.com. “In many states, drivers can keep small speeding tickets and other minor infractions off their records by going to traffic school or taking a defensive driving course, up to a limited number of times.”

That’s the technique employed by Tena Price, a small business owner whose company manufactures electronics in Waco, Texas, after she received a ticket for running a red light. She took a defensive driving course online. The class lowered helped to lower her rate for three years. Price said she plans to take another class only if she receives another ticket.

Attending a course in person is cheaper than taking an online class, but having the remote option is beneficial if you prefer answering all the questions from home.

“The online class was $30 more and took a long time, so I will take it in person next time,” she said.

Demonstrating Reduced Risk 

Lowering your insurance premiums all depends on demonstrating your reduced propensity to have an accident. That’s why moving violations, consequently, have an adverse effect on your premiums.

InsuranceQuotes.com and Quadrant Information Services calculated the impacts of 17 common moving violations in all 50 states and Washington, D.C. using data from the largest carriers which represent 60% to 70% of the market share in each state or district. The averages are based on a 45-year-old married, employed female with a clean driving record driving a 2012 sedan. The hypothetical driver has a bachelor’s degree, an excellent credit score and no lapses in coverage. 

Insurers use criteria that assess risk, said Loretta Worters, vice president of the Insurance Information Institute in New York City. Taking remedial traffic classes increase your safety quotient and make your less of a liability in the eyes of insurers. 

“Your premium is based on how likely you are to get in an accident and how much that accident will cost,” Worters said.

The average yearly auto insurance premium is about $800, but there is wide variation around these averages, said Worters. For many insurers, beyond accident and moving violation history, “credit-based insurance scoring is one of the most important and statistically valid tools to predict the likelihood of a person filing a claim and the likely cost of that claim,” she said.

“Credit-based insurance scores are based on information like payment history, bankruptcies, collections, outstanding debt and length of credit history,” Worters said. “For example, regular on time credit card and mortgage payments affect a score positively, while late payments affect a score negatively.”

–Written by Ellen Chang for MainStreet

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