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Since so many people read the last insurance article, I thought I would try another one. Now, about those “Safe Driver Insurance Plan” (SDIP) step numbers. Just when you thought you had figured out what your insurance was going to cost, another variable pops up. Everyone probably knows that there is system that insurance companies use to rate your driving ability. You probably get a letter each year giving the rating  “Step” for you and the other drivers on your policies, so you may even know your rating. Have you ever really tried to understand how these ratings affect the money you pay for your policy? You might be surprised. 

First, you have to look at how the “Step” number is calculated. For whatever reason, basic insurance rates  are stated using a “neutral” Step of 15.  If you have a Step rating higher that 15, you are going to pay more than the base rate.  If your Step is less than 15, you will pay less than base rate. This “neutral” step is somewhat artificial, since a majority of Mass. drivers are at Step 9 or 10. This does, however, give the insurance companies the opportunity to offer “reduced costs” to the majority of policies they write. Don’t you feel better already? When you start driving, before you have a driving record, you start with a Step of 15, paying the basic policy rate. This way, the teenager who just got their license isn’t being penalized, they are paying the standard basic policy rate. They just happen to be paying quite a bit more than three-quarters of the other drivers in the state. 

The rating system uses a window of 6 driving years to define your driving history. For each year you drive without an accident or traffic infraction you are given one “good driving credit” to be subtracted from your Step. The number of good driving credits is limited to 6, allowing for a minimum Step of 9. For accidents or driving infractions, points are added. A minor driving infraction (e.g. speeding or, believe it or not, driving with an expired inspection sticker!) will result in a surcharge of 2 points. A major infraction (DWI, Driving to Endanger) gets you 5 points. A “Minor” accident results in 3 points and a “Major” accident is 4 points. I’m not clear on the definition of Minor and Major accidents, but these are insurance claim accidents. No ticket has to be issued. These “surcharge” points remain in the Step calculation for the entire 6-year window. If you are interested, the maximum Step is 35, but if you have a  Step of 35 and still have insurance, you have much more money than you have driving skills. There is a general misunderstanding that the first minor violation is not a mark on your record. This is not really true. While a single, minor traffic violation within the six-year history window does not result in any “surcharge points” it does eliminate the “good driving credit” for that year, with the result being one higher Step next year. 

Now for what it costs you. According to the Division of Insurance, a single point is worth 7% of your mandatory coverage and 6% of your collision coverage. That is, if you have a Step of  9, you are “saving” 42% on your mandatory coverage and 36% on your Collision. Another way to look at it is that, for every point you add, your mandatory insurance goes up by 7% and your collision goes up by 6%. (For you number crunchers out there, it’s actually worse. The increase is a fixed number based on 7% and 6% of the “Base” rates at Step 15 – a much higher number.) In the case of just one of my policies, each point costs me $82.75. The same Step point on my daughter’s policy in Somerville would cost $108.50. 

If you tend to speed, move to the suburbs. OK, so having a minor infraction (a speeding ticket is a minor infraction) and losing a single “good driving credit” point will cost me $82.75 for the full 6 years. That’s $496.50 total. ($651.00 for my daughter. She’s getting a copy of this!) A second speeding ticket next year would result in the loss of another good driving credit point and TWO additional surcharge points, for a total of three MORE points. That’s going to cost me another $248.25 per year or $1,489.50 over the six years. (That’s $1,953.00 if I lived in Somerville.) So, just to drive it home, a bad run of a couple of speeding tickets is going to cost in the neighborhood of $2,000 to $2,500. And it can get worse. If the additional points cause you to become the driver (on a multi-vehicle policy) with the most points, you will now be listed as the primary driver on the more expensive car and affect that higher cost policy.  Now, does it really matter what the original ticket costs?