Your Licence vs Your Insurance – A commentary
While browsing online, I read an article on a website called: www.ottx.ca – a company that helps you fight traffic tickets, detailing how your driving record affects your insurance rates. The site was pretty harsh on insurance companies, stressing how easily the insurance companies put people into a high risk category and the consequences of being a high risk driver.
None of us want to pay high premiums for car insurance – that is a given, but what are we doing to curb high risk classification? Why is the buck always passed on to the insurance companies? Why is it their fault that we totaled our car and our rate went up?
Yes, it is true that your driving record is tied into your insurance premium and yes, the auto insurance companies track them. Guess what – they aren’t the only ones! Life insurance companies want to know about your driving record too (it is a question on many life insurance applications) – they want to know if you are a higher risk of killing yourself. It all comes down to mitigating a loss. Insurance companies are out to make a (hold on here comes a very bad word) PROFIT. That is how they can:
- insure you – they have to keep certain levels of cash reserves to pay for claims
- employ people – Insurance companies employ allot of people…how many insurance people do you know?
To quote the article on www.ottx.ca:
“if you have had the misfortune of being involved in a collision that is deemed your fault, or if you have received a series of traffic convictions, then your risk factor as a client to the insurance company, will increase. How does your insurance company compensate for this, by labeling you as a “High Risk” driver and increasing your insurance premium”
In a word – YES – if you are out there getting a bunch of tickets, chances are that you are driving more aggressively. Your documented driving behavior indicates that you are a greater risk to the insurance company if they ever need to cover a bigger or several smaller claims!
Here is the basic criteria you should think about: Would you insure you? What would you charge yourself?
The fundamental premise of insurance is to spread the risk of a few amongst the many. Simple enough. The problem that arises is that once you have been in an accident or had a ticket you will change your driving habits. (If you get a ticket by all means handle it in whatever way you feel comfortable – I have gone to trial before and reduced the charge).
Most people will just improve their driving habits and not get another ticket for years – These people don’t usually get penalized!
Some people just don’t care or are really bad drivers – If you haven’t seen the show Canada’s worst drivers…you should. These are the people that are out there on the road with you!
Other people will overcompensate -once you have one, chances are you are more likely to have another (they do have statistics that prove this).
I must stress – Losing your confidence in your driving is not your fault. An accident is a very scary experience. I was t-boned when I was young (18 years old). A cab driver ran a red while I was making a left turn and totaled my car. My back has never fully recovered from it. I really struggled to do left turns for a long time.
However it happens, when anyone gets into multiple accidents or gets a series of tickets the cost (or potential cost) to the insurance company goes up (in the form of payouts of claims) which is disproportionate to the amount of premiums you pay. It is only right for them to want to recoup the funds. (think of the shareholders – some of them could even be you!)
Insurance companies are coming out with new and innovative products to help good drivers protect their driving record – For Example: The accident forgiveness rider.
- The positive side:
- It waves the 1st at-fault accident that you have
- The Potential downside:
- If you were thinking of changing insurance companies the following year – forget it – they are the only ones that will forgive it, anyone else will charge for the accident
The crux of my point is this: If you are a high risk driver – there is probably a really good reason for it. For the most part, the big bad insurance company is not out to get you – they are just hedging their bets.
If you are young, you are highly inexperienced on the roads and it will take time to get you used to the hustle and bustle of navigating the roads (city or otherwise).Take your time, be listed as an occasional driver under your parent’s plan so that you can get some experience under your belt before you go off and get your own car.
Here are some tips that may help you secure lower insurance rates:
- A good broker and/or a good insurance company
- Don’t drink & drive
- Stay focused while driving
- Drive defensively – don’t be weaving in and out
- Wear a seatbelt
- Finally always remember that driving is a privilege not a right.
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November 26th, 2007 at 10:36 pm
Ok, but what happens when you get a ticket for something that is what most of us would deem “harmless”. Should you just pay the ticket and admit blame, fight the ticket for a reduced charge, or cough up $300+ bucks to fight the ticket with a paralegal like Pointts or X-copper?
From an insurance insider point of view, how much does the insurance company know? How much are premiums likely to go up for a 2 or 3 demerit point violation?
November 27th, 2007 at 10:09 am
Well the law is the law and the officer writing the ticket is generally just doing his job (as much as I disagree in some cases like speed traps etc)
Personally – I would always dispute. Let’s not forget that the city is a business and the infractions are a source of revenue for them. make them work for their money. Bargain, negotiate, reduce it as much as possible.
In the end, unless they dismiss the charges, you will still be taking the blame and admitting fault. You will just be admitting to a lessor charge (from my own experience)
PLEASE NOTE: I am not a paralegal. I am just passing along information based on my own experiences.
Whether you choose to fight with a paralegal or to do it yourself is based on a few things:
a) your comfort level
b) the ticket amount (if it is small – i would suggest fighting it yourself)
c) the severity of the ticket
Now as per my field of expertise, insurance companies seldom look at the demerit points. The broker may keep an eye on them, but to be honest if you have been convicted 3 minor tickets in 1 year your rates are going to be affected.Your premiums won’t be affected by 2-3 demerit points. There is a new endorsement to Bill 203 however that will affect drivers who blow between .05 and.08 on their breathalyser tests – I will research the insurance implications and write about it soon.
The insurance companies and brokers can’t monitor every single driver’s records all the time (although some have bought a package that gives them the ability to get the Motor Vehicle report in batches: meaning that they pull all of their clients records every year) – they may pull random checks of their clients during annual audit season so unless you tell them they won’t generally know. (Don’t forget that if the ticket comes as part of an accident – the insurance company will definitely know).
The tickets will turn up if you are shopping around – but again, your current insurance company may not know about that. You should also note that if you choose to fight the ticket you will have to be aware that the offense date will change (unless it is dismissed) because it is technically not on your record until the ticket is settled. So if you fight it today and plea guilty to a lesser charge next year, the offense date will be next year and then you will have the ticket on your record for 3 year following that date.
Good luck with your ticket and if you would like a quotation for your home and auto, please feel free to contact me.