Auto insurance providers use many factors to calculate the monthly rates for a policy and each one has its own formula that it relies on. Because of this, it is hard to establish exactly why your particular insurance policy costs how much it costs, especially since these formulas are not made public.
However, one factor that has a big impact on all policies, regardless of provider, is how you drive. Companies will always look at your driving record in order to determine the price of your premiums. Obviously, safe drivers will get much better deals since they are less likely to cause an accident that will require them to file a claim with their insurer. On the other hand, drivers who have a history of violations, accidents and DUIs will find it much harder to get a good price on an insurance policy and some providers might flat out refuse to insure them.
What Insurance Companies Know
Most US states use a points system in order to establish the severity of a driving violation. These systems are similar, but not identical from state to state, so the first thing to do would be to familiarize yourself with how the system works where you live. You can usually find this out by visiting the website of your local police department or at the DMV. These infractions are added to your driving record which the insurance company will check when it is time to determine the cost of the premiums for a policy.
However, not all violations are taken into account. Minor violations such as driving with a busted tail light or getting a parking ticket tend to only result in a fine and these are not added to your record. It is the moving violations that are your biggest concern. This is because doing something potentially dangerous while driving, you are significantly increasing the chances of getting involved in an accident.
Moving violations will have a big impact on your insurance policy as they will show that you are not a safe driver, but they also range in severity. Something like driving 10 miles over the speed limit can be considered to be a minor moving violation while driving 30 miles over the limit would be major. However, even minor violations can significantly increase the cost of your premiums by 10% to 15%. Major violations are often used as the main reason for denying someone an insurance policy. Insurers regard drivers with major violations as too much of a risk and try to avoid their business altogether.
Pay As You Drive Insurance
Moving violations tend to stay on your record for around three years, so they can have an effect on your policy for a long time. However, if you are eager to prove that you are, indeed, a safe driver even though you have a few violations on your record, you could choose a pay as you drive (PAYD) insurance policy. Under this type of policy your insurance company will monitor your behavior behind the wheel and you will be charged accordingly.