How your driving record affects your life insurance rates

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How your driving record affects your life insurance rates

No one is a perfect driver, and a lot of us have been punished for it. It’s not always a big punishment – maybe it’s just a speeding ticket, a few points on your record. But big or small, anything on your driving record can affect your life insurance rates.

During the underwriting period – the part of the application process where the life insurance company is assessing your risk – the insurer will look at your driving record to see if you’re a risky driver. But don’t worry – this isn’t a black box. In fact, we can tell you exactly what the life insurance companies will be looking at when they decide your rates.

What’s in your Motor Vehicle Report (MVR)

Basically, a Motor Vehicle Report (MVR) is a report card for your driving. This is what your life insurance company will look at during the underwriting period (it’s also used to determine car insurance rates; surprise!).

You may also know it by the name "driving record" – depending on your state, it may also be called something else, but your local licensing agency will always know what you’re talking about if you say driving record.

Your MVR will feature officially documented violations, such as:

  • Traffic citations

  • Vehicular crimes

  • Accident reports

  • Driving record points

  • DUI convictions

Depending on your state, your MVR may feature violations from as far back as five or seven years.

You may be thinking – Hey, how come the insurer can get a copy of my MVR without me seeing it? Turns out, you can see it. You just have to order your own copy. Find out how to order your MVR from your state’s licensing agency here.

After you get your copy and see what’s on your record, you can pretty accurately guess what your life insurer is going to think and whether or not your rates will go up.

What your life insurer is looking for

Ideally, your life insurer is looking for someone with a perfect driving record. If there’s nothing on your driving record, congratulations! You can close this article and sleep well tonight.

For the rest of you, let’s look at how life insurers are going to be looking at your record.

First of all, it’s important to understand that life insurers will place you in a category based on your risk factors. These categories – called classifications – help decide what your monthly premiums will be. You can read more details about life insurance classifications here, but the basic gist of it is this: the riskier you are, the worse your classification will be, and the higher your premiums will be.

In order to get the best classification at most life insurance companies, you need to have absolutely no DUIs (driving under the influence) or DWIs (driving while intoxicated) on your record in the past five years. Some insurers even increase that to ten years. You also cannot have any record of reckless driving or a license suspension.

Typically, you also cannot have more than two moving violations in the last three years. You’ll get marked for a moving violation any time you break a law while the vehicle is in motion. Examples: speeding, failing to stop for a pedestrian, failure to use a seatbelt.

What happens if you have a DUI, DWI, or reckless driving on your record

Life insurance companies are very strict about DUIs and DWIs. Like I said above, you can’t get the highest classification if you have a DUI/DWI on your record in the last five years. But some companies are even stricter – they won’t give you life insurance at all if you have a DUI or DWI on your record in the last five years.

Luckily for drivers who have changed their behavior, other life insurance companies are not as strict. They knock that five years down to two or three as the classification gets lower, making it easier to get life insurance despite past transgressions.

Same goes for reckless driving – while not all life insurers specifically look at reckless driving violations, the ones who do hold it up to the same standards as DUIs and DWIs.

If you have a DUI, DWI, or a reckless driving violation on your driving record in the last five years, talk to an independent agent. Independent life insurance agents know how insurers classify customers, and can help you pick the life insurance company that will give you the best rate no matter what your driving history is.

What happens if you have two, three, or more moving violations in the last three years

Most life insurers won’t give you the highest classification if you have two or more moving violations in the last three years. Depending on the company, that three years may be upped to five years.

Unsurprisingly, life insurance companies are as strict about moving violations as they are about DUIs/DWIs. Some life insurance companies won’t give you a policy at all if you have more than two moving violations on your record.

The life insurers with less strict standards are still pretty strict – instead of accepting no more than two moving violations, they may accept up to three moving violations in exchange for a much higher monthly premium.

If you have moving violations on your record, talk to your independent life insurance agent. They can help you find a company that will insure you despite your driving record.

In the most dire cases, time may be your only solution

Because life insurance companies are strict about driving records, one solution may be to wait to apply for life insurance. While we typically tell people to buy life insurance as soon as they know they need it, it may make more sense for those with multiple violations on their records to wait for those violations to be expunged.

However, we suggest you apply anyway – your independent life insurance agent can help you make the decision to wait if you both determine that’s the best course of action. They may also be able to help you find alternative life insurance products that fit your needs.

Image: Michael Zhao