How points affect insurance premiums?


In the field of car insurance, losses by policy holders are known as insurable interests. Losses which are considered as insurable interests are those which are to be compensated in the event of accident or car related mishaps. To monitor the compensations given to policy holders the insurance companies developed their own system of pointing car insurance holders. Every policy holder has his or her own nil value in the record books of insurance companies. This pointing system is the device used by insurance companies to point out the risks of giving out car insurance policy to policy shoppers. Car insurance companies are companies which base their rates through the risks they are compensating for. The insurable interest of the policy holders are defined through the risks in insuring a policy holder. These risks are known by the companies through the pointing system.

Each policy holder is a subject to this pointing system. This pointing system is a merit and demerit type of pointing system. Merits are given to policy holders who showed good driving record. A good driving record can be made through driving attitudes that are according to fundamental traffic laws. The evaluation type of the insurance companies can be generalized through the definition that every infraction will be added to the record of the driver as points or point. Every kind of proven traffic infraction has its own assigned value. These values are assigned to each infraction based on the gravity of the infraction made. More points would directly mean as a worse off driving record. Even if these types of evaluation may not have direct effect on the policy holders’ current premium package, it may have an effect on the reapplication of insurance policy. The policies which are to be applied in the future by the policy holders will be affected by their driving record in the previous years. The policy holders’ driving record can have a negative effect through higher premium requirements. However, policy holders should also keep in mind that the records are only valid if they are up to date. This means that violations and infractions can be lifted through being a good driver to negate the previous record.

However these rates have no direct dollar transmutation and greatly vary across insurance companies. If policy shoppers are to compare insurance companies’ policies through their pointing system, the comparison can only be made through a direct consultation to insurance governing bodies.