First my source of information comes from a couple different people who work in the insurance industry and I have asked them many of the same questions and the answers are all about the same but does vary by company and state a bit. Some of it is based on personal experience where I have gotten tickets and choose not to contest it and took the points.
I can say I've never seen my premiums increase due to tickets. Actually ever year my premiums have gone down except when I replaced and old car with a new car. Also, with State Farm who I have even if they did happen to their random check when I had points I would only loose my good drive discount which 10% on the one vehicle which is primary to me not all my cars. I would loose this for as long as I had points, Now if they checked again and saw more points they would begin jacking my rates.
I did finally find out why my premiums decrease every year. As the car ages the replacement costs drop so do the premium on the comprehensive portion of the insurance.
Pretty informative post there; thank you for the info.
I cannot disute anything you said nor do I intend on arguing it... But, would you say that with a new policy (the first time one signs up with a new carrier) an application will definately go through underwriting & the insured's driving record will be carefully scrutinized?
Correct?
It is my understanding they check everything, even more then you think these days, including your credit history. Face it, they either want the lowest risk person they can find thus less likely to make a payment out or if your a risk they want to be able to know how bad so they can charge you as much as they can. Whether you like it or not, today they feel if you had poor grades in school and a bade credit history the figure you lack poor decision making abilities thus more likely to have an accident.
Also, why do you think that it is costly for an insurance company to check everybody's record once a year?
I assume that they have a source to that information so one would safely assume that any premium increase that they might be able to justify due to new info that they might find... And all those potential premium increases would end up more than paying for the payrol time invested in running checks on policy owners come renewal time! Wouldn't it?
Because states charge for this information, except MASS which kindly hands over the information, but they have state controlled premiums. At this time this information is not electronically transfer so that means the insurance companies must make a formal request per person and pay a fee for each request. Plus it is about calculated risk for them, check everyone or check the few who you know might turn up a ticket and jack their premiums.
So people like me who get a valid ticket once in a blue moon get away with no premium hikes since I am low risk and because the insurance companies tend to focus on people who they know will most like offend and they can make more.
One last point about this, I also found out your likelihood of being checked increases base on your independent agent if you have one. Some agents who have a large number of high risk drivers tend to have all their clients checked. This why you should shop around for an agent, not all agents are the same for the same insurance company.