If you are convicted of a driving offence – anything from driving with defective brakes to causing death by dangerous driving – you are likely to end up with penalty points on your license. The penalty point system is designed to identify those guilty of such offenses, to deter people from committing them in the first place, and to punish those who do.
One of the ways in which this punishment applies is the effect on your insurance, and this can be far from a short-term penalty.
Why are penalty points considered by insurers?
The process of insurance is sometimes compared to gambling – the insurance company is betting on whether or not you’ll be involved in an accident. If you aren’t, they get to keep the money you’ve paid in premiums; if you are, they have to pay out to cover it. Therefore, if you are more likely to have an accident, they are more likely to have to pay out – and they’ll demand a higher premium from you to balance out that risk.
Insurance companies, therefore, use a range of factors to calculate your individual risk. This may include your age and gender, the type of vehicle you drive, your occupation and much more. Statistically speaking, drivers with points on their license have more accidents and make more claims – and that’s why insurers take them into account and raise premiums accordingly.
Do you have to disclose penalty points?
Quite simply, yes. If you don’t disclose penalty points when asked on your insurance application and later need to make a claim, that non-disclosure can invalidate your insurance – leaving you significantly out of pocket. In addition, if a policy is cancelled because of non-disclosure, you’ll also have to disclose that fact to future insurers, who may raise your premiums even more or refuse you insurance as a result. Non-disclosure can even lead to a fraud conviction.
How much of a difference does it make?
How much your insurance premiums increase will often vary depending on what offense the points relate to. Different codes are used on your license to identify the type of offense – there’s a full list on the Government website – and more serious offences (or those where you’re considered more likely to reoffend) are generally subject to much higher premiums. Drunk driving, for instance, is generally taken very seriously and may see your premiums rise by 50% or more.
You will also find that different insurers will calculate your risks differently, so it pays to shop around. If you drive for a living, don’t forget to look at specialist insurance – taxi insurance, for example, will take into account factors unique to your profession.
Avoiding penalty points
If you’re caught speeding, you may be offered a speed awareness course as an alternative to taking penalty points on your licence. This might sound like a great way to avoid the insurance hike, but it may not be. Many unsuspecting drivers have taken this option, only to find that their premiums still go up anyway.
This is because it’s not the penalty points themselves that concern insurers, it’s your risk. Although a speed awareness course is intended to reduce the chances of you speeding, attendance at one does indicate that you’ve been convicted of a speeding offense, which for some insurers will put you in a higher risk bracket.
The only real way to avoid penalty points, and the insurance hikes that go along with them, is not to get them in the first place. However, if you do get penalty points, that doesn’t mean your premiums will be high forever; if you don’t accrue any more points, many insurers will gradually decrease the premiums again as they get older, and your points will expire after a set period.