A Single Moving Violation Can Cause A Rate Hike Of 92%

Most U.S. drivers know that a moving violation, such as a traffic ticket, will cause an auto insurance rate hike.

However, the size of that rate increase may be a little shocking to some.

moving violation premium increaseFor the second year in a row, insuranceQuotes.com commissioned a Quadrant Information Services study that found car insurance premiums can climb by as much as 92 percent after a single moving violation on average nationwide.

The study analyzed the average national premium increase for one moving violation in 17 categories.

The study found that premium increases vary significantly between different types of violations.

For instance, one conviction for driving under the influence (DUI), also known as driving while intoxicated or DWI, will result in a national average premium increase of 92 percent; however, driving without a license results in a 16 percent average premium spike

According to Mike Barry, spokesman for the nonprofit Insurance Information Institute (III), this study further illustrates the ways in which insurers use various driving infractions as a way to assess different levels of risk for individual drivers.

“The bottom line is that certain moving violations are linked to more expensive claims than others,” Barry says. “I’m not surprised at all by the DUI number because an incident like that has the potential for a truly catastrophic loss of life, bodily injury and even very expensive lawsuits.”

How much insurance rates rise after a moving violation

According to the study, some moving violations will impact your insurance rates very little, while others will result in a significant spike.

These findings should come as no surprise, says Dan Weedin, a Seattle-based insurance and risk management consultant.

“The more a driver is willing to thumb his or her nose at the law and the safety of others, the more the premium increase is going to hurt, because insurance companies don’t care for that behavior,” Weedin says.

For instance, Weedin points out that most drivers know that speeding 30 miles per hour over the speed limit is more severe — and dangerous — than exceeding the limit by 5 mph.

What’s more, insurance companies have algorithms that show certain driving behaviors to be more indicative of future risk than others.

“The likelihood of someone being in an at-fault accident is higher after a reckless driving violation compared to someone who gets pulled over for driving without a license,” Weedin says. “Insurance companies will start charging you more based on how risky you are to insure.”

How moving violations affect insurance rates by state

The type of moving violation isn’t the only thing that may affect your auto insurance rate. The state where you live also affects how much a moving violation will impact your rate.

  • For instance, a DUI conviction in North Carolina will result in an average premium increase of 337 percent (in Hawaii it’s 289 percent, and 184 percent in California). Meanwhile, the same violation in Maryland will only result in an average premium increase of 15 percent.
  • Similarly, a reckless driving violation in Hawaii will result in an average premium increase of 287 percent (181 percent in California), while in Arkansas the same violation will only bring about an average premium increase of 24 percent.

moving violation premium increaseAccording to Doug Heller, an independent consumer advocate with the Consumer Federation of America, this state-by-state disparity boils down to how each state uniquely regulates auto insurers.

“Insurers in some states can use a whole host of rating factors that aren’t in any way related to how someone drives,” Heller says. “But other states are much more prohibitive on how they can set rates, which is probably the source of the divide.”

In California, for instance, an individual’s driving safety record must be the primary factor in determining what he or she will pay for insurance (the same goes for Hawaii).

This means that any blemishes on your driving record — such as a DUI or reckless driving violation — will impact your premium more significantly than in less tightly regulated states.

Why does North Carolina show such significant premium increases?

Out of all 50 states plus Washington, D.C. featured in the insuranceQuotes.com study, North Carolina may be the most perplexing.

Not only did it come in first or second in 14 out of 17 moving violation categories, it also showed significant increases between this year’s and last year’s study findings.

For instance, a DUI conviction in 2014 resulted in an average premium increase of 251 percent — a number that has since jumped by 86 percent.

According to Heller, this is probably a byproduct of North Carolina’s unusually large residual auto insurance market (sometimes called “high risk pools”).

“North Carolina fits into its own little camp when it comes to auto insurance markets,” Heller says.

According to the III, residual markets are designed for “high risk” drivers who may have trouble obtaining a regular auto insurance policy because of extremely poor driving records that may include several at-fault accidents or DUI convictions.

State regulators work with the insurance industry to establish these residual markets.

North Carolina is the state with the highest percentage of drivers obtaining insurance through the private passenger residual market — nearly 1 in 4 drivers are considered “high risk”.

This is important to understand because, according to the III, if rates charged to high-risk people are too low to support the program’s operation, insurers are generally assessed to make up the difference. These additional costs are typically passed on to all insurance consumers.

However, North Carolina insurers can’t charge high-risk drivers as much as they’d like to because of state insurance regulations, and so the cost of those drivers is likely subsidized by raising rates astronomically on non-high-risk drivers with a single moving violation.

Calls made to the North Carolina Department of Insurance were not returned.

How to save money on your insurance after a moving violation

moving violation premium increaseHow long a violation stays on your record will depend on both the severity of the violation as well as individual state laws. The good news is that even if your insurance premium takes a significant hit, there are some steps you can take to eventually bring it back down to previolation levels.

1. The power of forgiveness.

Auto insurers are typically more forgiving of minor traffic tickets, like speeding or driving in the carpool lane, than others.

“In most cases, going to court about a minor traffic violation — most things besides reckless driving and DUI — can get you a plea bargain to some other offense or a ‘diversion’ such as having to take a course or watch a movie,” says Eli Lehrer, president of the nonprofit research group the R Street Institute.

2. Shop around.

“Insurers all penalize mistakes differently, so you may be able to find a new policy that’s cheaper than the one you have, even with a moving violation on your record,” Barry says.

3. Take a defensive driving class.

Most states offer defensive driving classes, also known as traffic school. Completing one of these classes may qualify you for a discount.

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