Nowadays, people get insurance for almost everything. If you think insurance is just a pain because of all the payments you’ll make, think again. Insurance helps and can really get you out of financial trouble quickly.
For instance, with driving a car, insurance can cover damages on your vehicle, personal injuries, and many other liabilities.
If you didn’t have any insurance of any kind, then you would be on the hook for all of those costs. That can add up fast! This is why everyone typically gets coverage for everything that can put them in a financial bind.
Everyone knows that driving is a privilege and not a right. To drive a vehicle, you need to have a proper driver’s license. A license isn’t a guarantee that’ll make you drive safe, but it’s a guarantee that you’ll be liable for any accidents or injuries you’ll cause if you’re a reckless driver. But how does your driving record affect life insurance?
To keep it short, we’ll say it right now: Your personal driving records can significantly affect your life insurance rates because you’re at risk of an early death!
Your Driving Record Affects Your Life Insurance
You might think that “Oh, I have insurance right now, so I don’t mind the speeding tickets.”
Technically, you’ll be just fine with your current insurance rates as they won’t increase even if you happen to get a lot of tickets along the way. However, it’s when you apply for a new insurance policy that those additional tickets will hurt.
Will all play big roles in getting your insurance applications approved.
If you’re more of a living-on-the-edge person, then it’s most likely that even the top life insurance companies will increase your rates or even decline coverage – it just depends on the specifics of your case.
Case Study with Sample Rates
There are over a hundred different life insurance companies and each one may look at your driving records in a different way. Life insurance carriers underwrite applications and then put you into a Risk Class.
This risk class is how much your policy will end up costing. Depending on which life insurance company you apply with, the final risk class you get approved with can vary greatly.
John Doe is a 30 years old male and wants to find out which company will provide the best deal for a 20-year, $750,000 term life policy. He quit tobacco 5 years ago but has a DUI from 5 years ago. John also has a couple of speeding tickets within the past 24 months. His application was informally shopped to several top life insurance companies using quick quotes. The life insurance underwriters replied with the following:
- Company A – Application Declined due to John’s driving history
- Company B – Approved Standard Plus
- Company C – Possibly approved at a Table F rating.
- Company D – Possible Standard approval but will have a $5 flat extra for 3 years because of John’s driving history
Here’s how all of that breaks down:
|Company||Risk Class||Monthly Rate|
|Company B||Standard Plus||$44.41|
|Company C||Table F||$103.29|
|Company D||Standard with Flat Extra|
Years 1-3: $365
Remaining years: $53
As you can see, the price you end up paying can vary a lot depending on which company you get approved by.
Like we mentioned before, your rate isn’t based on what you apply for… It’s based on what risk class you’re approved for after your application is reviewed and the underwriter assigns you your risk class.
Here are the typical risk classes that life insurance companies use to when assigning rates and premiums.
|Rate Class / Risk Class||Pricing Result||Cost Rank|
|Preferred Best / Plus||50% of Standard||1 (Least expensive)|
|Preferred||63% of Standard||2|
|Standard Plus / Select||86% of Standard||3|
|Table 1 / A||25% over Standard||5|
|Table 2 / B||50% over Standard||6|
|Table 3 / C||75% over Standard||7|
|Table 4 / D||100% over Standard||8|
|Table 5 / E||125% over Standard||9|
|Table 6 / F||150% over Standard||10|
|Table 7 / G||175% over Standard||11|
|Table 8 / H||200% over Standard||12 (Most expensive)|
where do insurance companies get driving records?
The main thing that insurance companies do when looking at your driving record is that they look at your Motor Vehicle Report or MVR.
Another resource is from the life insurance application process. It can involve a detailed questionnaire and an interview from you, whether it’s through the phone, online or face to face. From that interview, they’ll get information about you and your lifestyle.
An MVR is a report of your driving record and can contain any illegal or delinquent behavior done when you’re behind the wheel. These records are kept by each state and can be requested by you or an insurance company. Part of the application process will require you to give your insurance carrier authority to ask for your MVR.
do insurance companies check driving records?
Can insurance companies check driving records?
Absolutely… and they often do before they approve your application.
What do they look for in your MVR? Since a motor vehicle report contains your driving record, insurance carriers will look at traffic violations and incidents you get involved with while on the road.
Top 4 Secrets about Driving Records and Life Insurance Rates
To be more specific here are the 4 main areas that companies look for with regards to your MVR and your final rate:
1. DUI and DWI
DUI means Driving under the influence, while DWI means Driving while intoxicated. As mentioned earlier, insurance companies don’t like clients who have risk behavior.
As statistics clearly show, 31% of car crash deaths involve drinking and being intoxicated. Police officers will surely apprehend you when caught driving under the influence. They often do sobriety tests to test if a person is drunk or not. This may include using a breathalyzer that measures blood alcohol level. The measurement of your blood alcohol level will provide a legal basis for the officer to charge you with a DUI.
Having caught with a DUI can affect and increase your rates when you apply for insurance. DUI reports stay on your MVR for as long as five years or even more!
2. Moving Violations or MVs
Depending on what state you are in, some states have varying behavior considered as moving violations. Here are some common moving violations:
- Driving while using your phone
- Distracted driving (includes using your phone, fiddling with the car stereo, eating, and drinking, etc.)
- Beating the red light
- Running a stop sign
- Not wearing seatbelts
- Sudden and incorrect lane changes
Not wearing seatbelts or eating while driving might seem minor offenses, but they can get you in trouble with insurance companies. Speeding, in particular, is a primary concern for insurance carriers because along with DUI, speeding is a primary cause of car crash fatalities.
You might be thinking that you were hurrying or you forgot to wear your seatbelts, but for insurance companies, these are behaviors that warrant them to increase your rates.
3. Reckless driving
Reckless driving is a behavior or act in which a driver can possibly cause harm to their self, the property around them, and people nearby as well. Parking tickets don’t appear on your parking record, but they can go to your financial records.
4. Major Violations
Insurance companies will classify your violations as “Major” and “MV” or moving violations. DUI and DWI are considered major and can lead you to have higher rates than usual. Reckless driving and a revoked license are also classified as major.
To qualify for a preferred plus, you need to have no majors in your record for the past 5-10 years.
Moving Violations are minor and shouldn’t affect your rates if you have 1 or 2 on your record. Having more than 2 or 3 mvs in the last three years, however, will affect your rates. More than four mvs will get your applications rejected.
It might not seem fair, but insurance companies see these high numbers as a pattern for risky behavior.
Can I still get reasonable rates even if I don’t have an “impressive” record?
You still can get good rates with your record, provided that you don’t have any majors within the past five years or if you don’t have three Motor Vehicle violations as well.
For example, some term life companies may look at your records differently, which is why it’s an excellent move to shop around for the best insurance provider for your situation.
Getting insurance is a smart way of protecting yourself when something wrong happens. Insurance can cover you, provided that you’re within the agreements of your policy. Coverage means that you won’t have to pay anything (or pay less) for any losses. Insurance companies often take a look at their client’s records as a way to approve or reject any new applications.
Providers can request a Driver’s records or MVRs so they can trace any risky behaviors that the client may have. Do note that your driving records can significantly affect your application and can significantly increase your rates. To get better rates, drive safe, obey traffic rules, and never drive while intoxicated.
Contributing Author: Tiffany Wagner makes ends meet by writing and contributing to different websites that specialize in finance, real estate, and lifestyle. When she’s not hustling, she spends her free time doing book reviews and playing Sudoku at her favorite coffee shop downtown.
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