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Points can Affect Auto Insurance Rates

The point system was established to create a safer environment and penalize high risk drivers who repeatedly break traffic laws. You almost will never lose your license from a single ticket unless it involves serious charges. However if you continue to defy the law of gravity in your vehicle and pretend the highway is a practice track for your imaginary Nascar team you will be left riding a bicycle to work one day.

Insurance points are different than DMV points. Points issued by the DMV go against your driving privileges whereas car insurance companies use a formula that include DMV points as just one part of the overall risk profile. For example when you file a claim or pay late your insurance score may drop in addition to the score change when points are earned from a traffic ticket. Of course, none of these items are good and your automobile insurance rates can change regardless if you have points on your driver’s license or not.

car insurance companies use an insurance score based on typical FICO credit based scoring to help predict loss. All car insurance companies have different and complex formulas for calculating your final premiums and the insurance score is just one of them. It does pay to learn more about how the insurance score works but just like your personal credit score the way it is applied by private companies can be very different from one provider to the next.

Many people have an option to attend driving school when they get a traffic ticket and this can be beneficial for keeping points off your record. However the urban legend of how attending traffic school will also keep car insurance rates low is exactly that… an urban legend.