Why Just One Speeding Ticket May Significantly Increase Your Auto Insurance Rates

Most drivers drive faster than posted speed limits, at least now and then, and many speed every time they get behind the wheel.  It does not seem to matter that average speed limits across the country are higher now than they were a decade ago.  Whatever the speed limit is, a substantial percentage of drivers are going to push beyond it; whether it’s because they are running late, because they are not paying attention to their speed, because they have a new sports car or because they just plain enjoy driving fast, and so on.  Clearly, there are not enough highway patrol officers to give speeding tickets to all those who speed, which means that the odds always favor the speeder in terms of not getting caught and ticketed.  

Until they do have a speeding ticket, most drivers give little thought to how this may affect their auto insurance rates.  They may be in for an unpleasant surprise.  To the cost of the ticket itself may be added an even more expensive increase in their auto insurance rates.  In cases of extreme speeding, a driver’s cost for auto insurance could double even on a first offense.

Why do insurers often raise rates after only one speeding ticket?  It’s simple.  Numerous studies by highway safety experts show that “the faster you go, the more deadly it is,” says Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry trade group. “There’s a higher possibility you’re going to cause a lot of damage to people or property.”

If you’re cited for speeding, your insurer may tack a temporary surcharge on your policy for three years.  At one large auto insurer, the surcharge may raise your rate by up to 26% the first year, then will gradually decline and disappear after three years, as long as you have no more moving violations.

The size and duration of the increase varies depending on several factors, including:

• Your driving record and your relationship with the insurance company. Some insurers waive the surcharge if the customer has had a long relationship with the company and previously had a clean driving history.
• Where you live. Insurance is regulated by the states, and different states have different laws regarding rate increases.  Some states don’t allow insurers to impose a surcharge for first-time speeding tickets, while others require insurers to raise rates for some speeding violations.  For example, a single male driver who lives in Phoenix and receives one speeding ticket will experience an average rate increase of 16%, but the same driver will pay no more if he lives in Philadelphia.
• How much you were exceeding the speed limit.  An analysis by USA TODAY found that 10% of ticketed drivers in 2002 were “extreme speeders”-drivers who exceeded 90 mph or 15 mph above any speed limit.  Extreme speeding is considered reckless driving, a major violation. Even a first-time citation can more than double your insurance rates.

Speeding may also affect insurance rates other than for auto insurance.  Insurance companies may look at your driving record when deciding whether you’re a high-risk customer and could charge you higher rates for life, health, disability or long-term care insurance.

On average, auto insurance rates are expected to rise by 6% in 2004, following an estimated 8.5% increase in 2003, according to the Insurance Information Institute.  The average annual cost for auto insurance is estimated to be $898 this year, up $51 from 2003.  Avoiding speeding can keep your costs from going up even more.

Once upon a time in the ancient past-at least 30 years ago, anyway-there was a series of public service ads on television and radio with the overall message, “Speed kills.”  One showed a clock and then a car speedometer pushing up past 65: “Don’t try to catch this hand [the clock] with this one [the speedometer],” the announcer advised.  In other words, it might be better to be late than dead or seriously injured.  It’s been a long time since there was a public campaign aimed at getting America’s drivers to slow down and save lives.  But that doesn’t mean speeding is any safer.  Speeders are still more likely to have accidents injuring themselves and/or others than drivers who obey speed limits.  An increase in insurance rates caused by speeding is troublesome, but even worse is the increased risk of death or serious injury.