What are the effects of driving record and geographical location on premium rates?


Auto insurance coverage ensures the safety of both the policy holder and other drivers on the road. Naturally, the driving record of the policy holder is one of the most influential factors that change the premium rates. Safer the driver is, better the premium rates. One small traffic violation can increase insurance rates up to 50% of the original.

Insurance companies have an access to the driving records of all individuals who have purchased insurance from the company. The following traffic violations have an adverse effect on the monthly premium rates:

Over speeding is one of the most common offenses that increase the premium rates. Since high speed increases the risk of accidents on the road, insurance companies immediately increase the premium rates if the policy holder gets a traffic ticket for speeding. Insurance companies decide the increase of premium rates depending on the level of speeding. Speeding in areas like school zone, or residential areas will almost double the insurance rates, since it classifies as reckless driving. Reckless driving accumulates points on the driving license, which causes further increase in premium rates.

Driving under Influence is another major traffic offense that can cause the insurance company to reject the coverage to the policy holder. Driving under the influence of alcohol or other drugs is considered a very serious offense, and the license of the driver can be suspended. Even if the insurance company decides to keep the coverage, the premium rates will surely be doubled as long as the record remains. Driving under influence is retained on the license for more than three years, and the premium rates are high until the record is clear.
Jumping red lights, failure to obey signs like yield and stop, parking illegally can all be reflected in the record, and therefore, can increase the premium rates. Although these are considered minor traffic violations, committing more than one of them can lead to doubling of monthly premiums.

Traffic violation is not the only reason for high premium rates. Sometimes, even with a clean driving record, paying high premium rates cannot be avoided. Insurance companies fix the premium rates depending upon the geographical location. This is because every geographical location has different risks involved when it comes to driving. Cities which have high crime rates have the risk of automobile theft or damages due to vandalism. Cities which have adverse weather conditions make driving difficult. Areas prone to natural disasters like flood, hurricanes or earthquakes naturally make the premium rates high.