Personal Insurance

How Your Driver’s License Status Affects Your Auto Insurance Rate

auto insurance

Driving on the public roadways is a privilege, not a right. You can drive on your own property with almost no restrictions, but if you’re going to use the roads paid for by taxpayers, you have to be licensed. The whole point of state-based licensing is to protect good drivers (and their passengers) by keeping bad drivers off the road.

Citations and Insurance

One reason you’re required to maintain a license and carry it with you when you drive is so your state can identify and track you when you’re caught doing something that’s against the rules. If you get cited, the resulting conviction goes on your driving record, and the information will eventually get back to your insurance company.

Insurance companies know that people who get more traffic tickets tend to cause more accidents. Because of this, they’ll ask you about citations when they quote you a policy. But they don’t just rely on the honor system. They’ll also check at least one of two official records as a backstop to the information you provide on your application:

Comprehensive Loss Underwriting Exchange (CLUE): Your CLUE report provides a five- to seven-year history of claims you have filed with insurance companies. All insurance companies report to the CLUE database, and the information is maintained by CLUE, Inc.—a private organization.

Motor Vehicle Record (MVR): Your MVR report is a record of your personal driving history, as maintained by your state’s Department of Motor Vehicles. It will contain any moving violations, convictions, points, suspensions or revocations.

If you get a ticket after your policy is already in force, you’re supposed to tell your insurance company immediately. Of course, many people “forget” to do so. Because of this, insurance companies will generally check your MVR from time to time to ensure that their information is up to date. Usually this happens around the time of your policy renewal. For younger drivers, companies often update driving records even more frequently.

When you’re convicted of a moving violation or other serious traffic offense, your insurance company may respond in two ways. One is to raise your premiums. The amount of the increase will depend on the severity of the infraction (a DUI vs. a “five over the limit” ticket, for example). The penalty will usually affect your premium for at least a couple of years, though this will also depend on the seriousness of the violation.

The other possibility after a serious citation (or after too many minor ones) is that your insurance company will decide not to renew your policy at the end of the term. This means you’ll have to find a different insurer. Depending on what happened, you may even need to get coverage from a so-called “non-standard” insurance company.

Driver’s License Suspension

If you do something particularly dangerous (or stupid), it’s quite possible that your state will decide to suspend your driver’s license. There are several things that can lead to having your driving privileges taken away. Some of the most common include:

  • Traffic citations: Whether or not they use a “points” system, all states have a system to track your moving violations to determine whether you should lose your license. If you accumulate too many points or citations (or if you get charged with certain severe citations), you can get your driver’s license suspended.
  • Driving under the influence (DUI): State laws vary regarding driver’s license suspension after a DUI arrest. Some states automatically suspend, while others wait until your second or third arrest. If you refuse a field sobriety test, breathalyzer, blood or urine test when stopped on suspicion of driving while intoxicated, most states will automatically suspend your license for this.
  • Failing to appear, failure to pay: If you either don’t respond to a traffic citation or don’t pay a required fine, many states will issue an automatic suspension of your license.
  • Failure to maintain insurance: If you’re stopped for a traffic infraction (or involved in an accident) and can’t provide proof of insurance, it’s likely that your state will take away your license.

Each state has its own rules for how long a license suspension lasts and what has to happen in order for a license to be reinstated.

If your license is suspended you can often apply for a “hardship” or “restricted” driver’s license that will allow you to commute to and from work or school, or to drive to receive medical care. Some insurance companies will decline to continue covering people in this situation, so you’ll have to work with your independent insurance agent to find a company that will.

SR-22/Certificate of Insurance

If you’re convicted of certain serious traffic violations—including DUI, reckless driving, and driving without insurance—your state may require you to “carry an SR-22” in order to maintain or restore your driving privileges. An SR-22 is not an insurance policy. Rather, it’s a form provided by your insurance company to verify to your state’s DMV that you have purchased and are maintaining the required level of liability insurance.

Many people mistakenly believe that being given an SR-22 requirement raises your insurance rates. This isn’t true. Rather, it’s the violation that triggers the SR-22 that raises your premiums, and not the SR-22 itself. That said, your insurance company may charge you a filing fee to create and submit the paperwork. The fee varies by state, but is usually $15 to $25.

Incidentally, the “SR” in “SR-22” doesn’t stand for anything in particular. It’s just the letters used to identify the form.

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