Why do insurance companies impose a premium increase as a result of points on your record?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Car insurance companies raise your premiums if you have points on your record because the points indicate that you have been ticketed for a driving violation. The fact you were ticketed indicates to the insurance company that you may be an unsafe driver, and that the risk of you having an accident may thus be higher. 

Insurance companies are in business to make money, so the amount they collect in premiums must exceed the amount they pay out in claims. In order to ensure that this is the case, they conduct studies and put policies into place that allow them to manage their risk.

This means if car insurance companies believe a certain person, or group of people, is more likely to get into an accident, they will charge that person or group higher premiums. These higher premiums will cover the cost of the larger percentage of people who are likely to make claims. 

What other factors might lead to a car insurance premium increase?

Points on your license make you a greater risk to the insurer, since you may take more chances driving or otherwise engage in illegal driving behaviors that could lead to an accident. Other factors that may increase your insurance rates in a similar (or even greater) manner include:

  • Being male: Men are statistically more likely to get into accidents then women.
  • Being a teenage driver or having one on your policy: Less driving experience and a more careless attitude mean teenagers get into more accidents.
  • A drunk driving conviction: If you have one of these, affordable insurance may be out of reach, if you can get any insurance at all.
  • Being single: Married people tend to be statistically less likely to get into accidents. 

Because points on your license can lead to an insurance premium increase, if you get a traffic ticket, you may wish to think about plea bargaining the ticket or even pleading not guilty and trying to get the ticket dropped. If you decide to do either of these things, it is a good idea to get legal representation to help you. 

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