How One Infraction Can Wreck Your Auto Insurance

Editors' pick: Originally published May 4, 2016.

There is no such thing as a minor traffic ticket.

Though the Insurance Information Institute (III) likes to point out that the annual cost of auto insurance has been nearly flat in recent years -- rising from $798 in 2011 to $815 in 2012, according to a December 2014 report from the National Association of Insurance Commissioners -- the Bureau of Labor Statistics notes that the cost of insurance eats up 2% of the income in low-earning households. With "low-income" defined as households making less than $20,000 annually, that's somewhat of a surprise, considering the average low-risk driver with a clean driving record for a policy with a $500 deductible for collision and a $100 deductible for comprehensive coverage pays $1,023 annually, according to AAA.

"In the decade prior to the release of the 2012 report, the typical U.S. driver's auto insurance expenditures increased by 10% while their housing expenditures rose 29%, food costs grew by 21%, and out-of-pocket health care spending went up by 52%," said Dr. Robert Hartwig, economist and president of the III. "All drivers—low-income and otherwise—benefit from a robust insurance marketplace where they can shop for the best policy at a competitive price, irrespective of how they pay for that vehicle."

No, auto insurance isn't as costly as other expenses, but it isn't exactly pocket change, either. It also gets significantly costlier even if you commit comparatively minor infrations. Laura Adams, senior analyst for insurance information and pricing site insuranceQuotes.com, notes that not signaling, failure to yield, not stopping for pedestrians, failure to stop at a signal, following too close, improper passing and speeding 1 to 15 miles per hour over the speed limit can all increase your auto insurance premiums by an average of roughly 20% -- according to an insuranceQuotes.com study.

Unless you've failed to wear your seat belt -- an offense that merits only a 5.76% rate increase, on average -- you're going to incur a significant penalty any time a police officer decides to send you off with something other than a warning. A single driver who drives in a carpool lane, for example, will see his rates soar more than 18% for that infraction. For comparison, that's a penalty similar to the 18.6% spike drivers see when they avoid a railroad signal. While there are ways to mitigate the damage, they require some time and money on your part.

"Even though rates typically go up for several years after you receive a moving violation, there are ways drivers can save money. Taking a defensive driving course to remove points from your record is a smart strategy," says Laura Adams, senior analyst at insuranceQuotes. "Many of these courses are offered online and can be completed in just a few hours. You can also enroll in a pay-as-you-drive insurance program, which gives discounts when you demonstrate safe driving behavior."

Great. So if you have to go to traffic school for the comparatively little things, what do the big offenses mean for your insurance. Well, consider that careless driving, the charge offenders try to argue down to from reckless driving, comes with a 27% hit. It does not get easier from there, with Adams warning of the big trouble associated with these Big 3:

DWI/DUI

Percentage of average rate increase: 94%

Driving under the influence is basically the worst offense a driver can commit in the eyes of an insurance company. It shows not only incredibly poor judgment, but recklessness and complete disrespect for the law. That said, it's far worse in some states than in others. A first offense DUI in North Carolina will increase a driver's rates 334%. In Hawaii, that results in a 294% spike, with California and New Jersey following close behind with 189% and 128% increases, respectively. However, Maryland doesn't think much of a first offense and lets drivers off with a 15% increase in Maryland (below the 16.6% average nationwide rate hike for driving without a license).

Adams notes that DWI and DUI tend to stay on your record for ten years, but has a far more damning effect in states that regulate based on driver behavior. In California and Hawaii, for instance, driver safety records are the primary factor in determining auto insurance rates. In Vermont (where DUI warrants a 94% increase in premiums) or Illinois (105.6%), where other factors come into play, the damage isn't quite as bad.

Reckless driving

Percentage of average rate increase: 84.5%

It isn't a close second, but it isn't something you want on your record, either.

If you were hit with a reckless driving charge instead of careless driving, it means you showed some intent. You were playing chicken, you were racing, you drifting into turns or you were otherwise being knowingly dangerous with your time at the wheel.

If you missed a yield sign and caused an accident, however, there's a case to be made for careless driving. Your ignorance and obliviousness doesn't speak well of you, but you weren't out to break laws and hurt people, which makes that 27% premium increase a lot easier to swallow than 84.5%. Besides, it's far worse if you get hit with a reckless driving charge in Connecticut, Massachusetts, Michigan and Illinois, where it will double your rates. Do something just as stupid in California, and your rates will triple. The worst place to do this, by far, is Hawaii -- where rates quadruple for being a purposefully terrible driver.

Speeding 16+ miles over the limit

Percentage of average rate increase: 28.5%

It used to be that 31 mph over the limit brought the hammer down. Now, it's just as bad if you go 16 mph over.

On highways, 16 mph over the speed limit can equal up to 91 mph in some places. In cities, its isn't quite double the speed limit, but it's bad. Also, as we mentioned earlier, there isn't any form of speeding that's particularly great for your record. Speeding 1 to 15 mph over the limit still warrants an average insurance rate increase of 21%.

However, if you'll excuse the pun, mileage really does vary on the most egregious of speeding offenses. Missouri basically doesn't care if you go 31 mph or more over the speed limit, and its insurers will just slap you on the wrist with a 9.1% rate hike for it. Meanwhile, Georgia, Pennsylvania, D.C., Alabama, Kentucky, Louisiana and Texas insurers all greet the worst of speeding offenses with rate hikes of 15% or less. Yep, driving up to 106 mph in any of those states is seen as a lesser offense than clogging up the carpool lane is in much of the country. A "minor" moving violation is, apparently, all a matter of geography.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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