Automotive

Demerit Points do not affect Insurance!!

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May 31, 2009
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Demerit Points do not affect Insurance!!

Ok, I'm just annoyed of the myths and misconceptions out there regarding Demerit Points.

Demerit Points DO NOT AFFECT INSURANCE. They only affect your ability to have a license, and come off your record after 2 yrs. So for you to get enough points to lose your license, must mean you're a pretty crappy driver. After 2-3 tickets in a 2 year period, I would just drive cautiously until my points fall off.

http://www.mto.gov.on.ca/english/dandv/ ... erit.shtml

This is another reason why I would not hire one of those ticket fighting companies, just because they can reduce your points. you can reduce your points yourself by showing up to court. I'd only hire them if I got involved in a major collision that involved numerous convictions.

Convictions on the other hand do impact your insurance. So if you plead guilty to a reduced fine and 0 points, guess what?!? That will still affect your insurance, as long as you plead guilty, you will have a conviction on your record. This isn't even a deal, because the likelihood of losing your license due to demerit points is so far fetched in my mind, unless you enjoy drinking and driving and get 3 tickets a year I dont know how you can lose your license.
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Thanks for posting...seems to be a daily question..lol
Crinkle_cut wrote:
Sep 18th, 2009 10:08 am
Ok, I'm just annoyed of the myths and misconceptions out there regarding Demerit Points. Demerit Points DO NOT AFFECT INSURANCE. They only affect your ability to have a license, and come off your record after 2 yrs. So for you to get enough points to lose your license, must mean you're a pretty crappy driver. After 2-3 tickets in a 2 year period, I would just drive cautiously until my points fall off.
http://www.mto.gov.on.ca/english/dandv/ ... erit.shtml

This is another reason why I would not hire one of those ticket fighting companies, just because they can reduce your points. you can reduce your points yourself by showing up to court. I'd only hire them if I got involved in a major collision that involved numerous convictions.Convictions on the other hand do impact your insurance. So if you plead guilty to a reduced fine and 0 points, guess what?!? That will still affect your insurance, as long as you plead guilty, you will have a conviction on your record. This isn't even a deal, because the likelihood of losing your license due to demerit points is so far fetched in my mind, unless you enjoy drinking and driving and get 3 tickets a year I dont know how you can lose your license.
RIBO LICENCED INSURANCE BROKER(ontario) -OVER 30 YRS OF EXPERIENCE
YOUR BEST INSURANCE IS AN INSURANCE BROKER
All the information provided is for reference purposes only. The actual wordings, conditions and exclusions of your policy will apply.
Member
Sep 8, 2009
374 posts
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Ottawa
Crinkle_cut wrote:
Sep 18th, 2009 10:08 am
Ok, I'm just annoyed of the myths and misconceptions out there regarding Demerit Points.

Demerit Points DO NOT AFFECT INSURANCE. They only affect your ability to have a license, and come off your record after 2 yrs. So for you to get enough points to lose your license, must mean you're a pretty crappy driver. After 2-3 tickets in a 2 year period, I would just drive cautiously until my points fall off.

http://www.mto.gov.on.ca/english/dandv/ ... erit.shtml

This is another reason why I would not hire one of those ticket fighting companies, just because they can reduce your points. you can reduce your points yourself by showing up to court. I'd only hire them if I got involved in a major collision that involved numerous convictions.

Convictions on the other hand do impact your insurance. So if you plead guilty to a reduced fine and 0 points, guess what?!? That will still affect your insurance, as long as you plead guilty, you will have a conviction on your record. This isn't even a deal, because the likelihood of losing your license due to demerit points is so far fetched in my mind, unless you enjoy drinking and driving and get 3 tickets a year I dont know how you can lose your license.
But you do get a conviction, when you get demerit points though, right? Unless you get it thrown out completely.
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I don't think demerit points are issued with no conviction..but convictions can be issued without demerit points.
wewillsee wrote:
Sep 18th, 2009 11:55 am
But you do get a conviction, when you get demerit points though, right? Unless you get it thrown out completely.
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YOUR BEST INSURANCE IS AN INSURANCE BROKER
All the information provided is for reference purposes only. The actual wordings, conditions and exclusions of your policy will apply.
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Crinkle_cut wrote:
Sep 18th, 2009 10:08 am
Ok, I'm just annoyed of the myths and misconceptions out there regarding Demerit Points.

Demerit Points DO NOT AFFECT INSURANCE. They only affect your ability to have a license, and come off your record after 2 yrs. So for you to get enough points to lose your license, must mean you're a pretty crappy driver. After 2-3 tickets in a 2 year period, I would just drive cautiously until my points fall off.

http://www.mto.gov.on.ca/english/dandv/ ... erit.shtml

This is another reason why I would not hire one of those ticket fighting companies, just because they can reduce your points. you can reduce your points yourself by showing up to court. I'd only hire them if I got involved in a major collision that involved numerous convictions.

Convictions on the other hand do impact your insurance. So if you plead guilty to a reduced fine and 0 points, guess what?!? That will still affect your insurance, as long as you plead guilty, you will have a conviction on your record. This isn't even a deal, because the likelihood of losing your license due to demerit points is so far fetched in my mind, unless you enjoy drinking and driving and get 3 tickets a year I dont know how you can lose your license.
+ infinity! Thank you!
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Jul 12, 2003
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When you fight your ticket at the trial, the proseuctor alwasy offer you to reduce fine and take no points and most of the people will accept it becuase they thought it will help on the insurance with 0 points taken off.

This is wrong...your driving record will still affected aslong as your have a conviction and insurance co look at how many conviction you have, not points.
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The only relationship/correlation between demerit points and insurance rates is that more serious offenses/convictions come with more demerit points, hence higher-raised insurance premiums
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Crinkle_cut wrote:
Sep 18th, 2009 10:08 am
Demerit Points DO NOT AFFECT INSURANCE.
very true! i used to work for one of the insurance companies and can confirm that they don't even track in their systems how many points you got.
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I've been saying this over and over.... :lol:
zloy wrote:
Sep 18th, 2009 3:43 pm
very true! i used to work for one of the insurance companies and can confirm that they don't even track in their systems how many points you got.
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YOUR BEST INSURANCE IS AN INSURANCE BROKER
All the information provided is for reference purposes only. The actual wordings, conditions and exclusions of your policy will apply.
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Dec 7, 2008
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Allow me to dissent. Rate setting models (how insurance companies decide how much to charge you) MAY include demerit point information. When you or your broker type in your personal information there is no place to state how many demerit points you have. There doesn't need to be if you declare what your were convicted of and when. This may mislead people to thinking that no insurance company cares about demerit points. This isn't true.

Think of it this way, you don't tell them how old you are, you tell them when you were born. The computer figures out how old you are. Same thing with convictions, you tell them what the offence was, the computer figures out the demerit points and when they expire.

Demerit points offer a quick guide to severity. The worse the offence is, the worse the demerit point hit. While everyone likes to think all those different convictions are all lumped into a "minor" insurance classification, there should be quantifiable differences in premiums based on conviction type.

The rate calculation, depending on the actuarial table/model used, may include demerit point factors: driver behaviour since conviction and point assessment (our driving improves for a short time afterward); likelihood of a payable claim (drivers with more points are more likely to get into accidents); licence suspension factors, and effect of premium increases (accidents or convictions).

Here is an example of how Quebec insurance (SAAQ) uses demerit point information to set rates (see pg 17 for an example).

Here is an example from Saskatchewan (check out the Safety Rating Scale)

While Ontario insurance companies MAY (notice how I use the word "may" and highlight it to suggest that it won't always be the case) or MAY NOT use demerit points, they are an excellent way of gauging the severity of a conviction. Demerit points matter. Convictions matter more.
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ticketcombat wrote:
Sep 18th, 2009 7:29 pm
Allow me to dissent. Rate setting models (how insurance companies decide how much to charge you) MAY include demerit point information. When you or your broker type in your personal information there is no place to state how many demerit points you have. There doesn't need to be if you declare what your were convicted of and when. This may mislead people to thinking that no insurance company cares about demerit points. This isn't true.

Think of it this way, you don't tell them how old you are, you tell them when you were born. The computer figures out how old you are. Same thing with convictions, you tell them what the offence was, the computer figures out the demerit points and when they expire.

Demerit points offer a quick guide to severity. The worse the offence is, the worse the demerit point hit. While everyone likes to think all those different convictions are all lumped into a "minor" insurance classification, there should be quantifiable differences in premiums based on conviction type.

The rate calculation, depending on the actuarial table/model used, may include demerit point factors: driver behaviour since conviction and point assessment (our driving improves for a short time afterward); likelihood of a payable claim (drivers with more points are more likely to get into accidents); licence suspension factors, and effect of premium increases (accidents or convictions).


While Ontario insurance companies MAY (notice how I use the word "may" and highlight it to suggest that it won't always be the case) or MAY NOT use demerit points, they are an excellent way of gauging the severity of a conviction. Demerit points matter. Convictions matter more.
This is actually not true. Insurance companies obtain your convictions when they order your driver's abstract and categorize your convictions to determine your applicable surcharge. Your convictions will fall into Minor, Major and Serious, for all convictions occuring in the past 3 years. Each carries it's own percentage surcharge to your premium. At no point is demerit's used or applicable.

I am an actuary and have worked for 5 of the top 10 insurance companies in Canada. Also I have actuarial colleagues who span the other companies and fail to know one company that uses demerit points in any of its calculations for premium determination.

Not to say you're lying about points being used, maybe back in the day? Maybe in a not so known insurance company that has only 10 million in premium volume countrywide?!?

But from my many years of experience, and being the person who submits rating algorithms, new factors and rate changes to each province's regulatory boards; I dont see demerit points being used or really relevant to determine it's significance as a rating factor. If you have a conviction surcharge and also rate by demerit points, then your are double counting the impact since these 2 factors are positively correlated. And the regulators won't allow this, they would make you choose the use of one only. When you run a significance test on the 2 variables, you will find the conviction categories having a greater level of significance and correlation to severity than a supposed demerit point factor.

Not to knock you, I love your ticket combat website, but just giving perspective from the industry, and from an actuary whose worked for companies that have over a billion in annual premium volume countrywide
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Ontario Insurer's do not rate on demerit points, only the conviction you are charged with.
ticketcombat wrote:
Sep 18th, 2009 7:29 pm
Allow me to dissent. Rate setting models (how insurance companies decide how much to charge you) MAY include demerit point information. When you or your broker type in your personal information there is no place to state how many demerit points you have. There doesn't need to be if you declare what your were convicted of and when. This may mislead people to thinking that no insurance company cares about demerit points. This isn't true.

Think of it this way, you don't tell them how old you are, you tell them when you were born. The computer figures out how old you are. Same thing with convictions, you tell them what the offence was, the computer figures out the demerit points and when they expire.
Demerit points offer a quick guide to severity. The worse the offence is, the worse the demerit point hit. While everyone likes to think all those different convictions are all lumped into a "minor" insurance classification, there should be quantifiable differences in premiums based on conviction type.The rate calculation, depending on the actuarial table/model used, may include demerit point factors: driver behaviour since conviction and point assessment (our driving improves for a short time afterward); likelihood of a payable claim (drivers with more points are more likely to get into accidents); licence suspension factors, and effect of premium increases (accidents or convictions).Here is an example of how Quebec insurance (SAAQ) uses demerit point information to set rates (see pg 17 for an example).Here is an example from Saskatchewan (check out the Safety Rating Scale)While Ontario insurance companies MAY (notice how I use the word "may" and highlight it to suggest that it won't always be the case) or MAY NOT use demerit points, they are an excellent way of gauging the severity of a conviction. Demerit points matter. Convictions matter more.
RIBO LICENCED INSURANCE BROKER(ontario) -OVER 30 YRS OF EXPERIENCE
YOUR BEST INSURANCE IS AN INSURANCE BROKER
All the information provided is for reference purposes only. The actual wordings, conditions and exclusions of your policy will apply.
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Both of you are far more qualified than I am with insurance. I am stating that right up front. And I am willing to accept that Ontario insurance companies do not use the MTO demerit point system if you say so.

However, RFD is a national discussion board and the examples I gave include provincial insurers who do use demerit points in their rate calculation. This thread, now a sticky gives the impression that demerit points don't matter across Canada. I'm suggesting that a blanket statement like that isn't always true.
Crinkle_cut wrote:
Sep 19th, 2009 1:53 am
Insurance companies obtain your convictions when they order your driver's abstract and categorize your convictions to determine your applicable surcharge. Your convictions will fall into Minor, Major and Serious, for all convictions occurring in the past 3 years. Each carries it's own percentage surcharge to your premium. At no point is demerit's used or applicable.
This sounds like private insurance companies are using their own rating category similar to demerit points but with far less detail as there are only three groups for convictions to fall into. Surely the rating structure would be more sophisticated than that? I'm not suggesting two separate surcharges for conviction AND severity. Only one rate setting factor based on severity of conviction as it relates to the likelihood of a future compensable claim.

Example, driver no seatbelt. Minor charge, 2 demerit points. But major injury claim if they are ever in an accident. A driver who isn't wearing his seatbelt is a higher risk of creating a payout. I can't see that conviction being lumped in with the same "minor" group as "failure to signal" even though they are both minor convictions and both have 2 demerit points.

A driver who gathers more demerit points is arguably a greater risk than one with more convictions and fewer demerit points. Number and severity of conviction have to be factors in rate calculation, no??? The quickest gauge of that seems to be demerit points which is what SAAQ (and other public insurers??) appear to be using. Private insurance companies may not use "demerit points" but they must be using a similar structure.
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ticketcombat wrote:
Sep 19th, 2009 1:06 pm

This sounds like private insurance companies are using their own rating category similar to demerit points but with far less detail as there are only three groups for convictions to fall into. Surely the rating structure would be more sophisticated than that? I'm not suggesting two separate surcharges for conviction AND severity. Only one rate setting factor based on severity of conviction as it relates to the likelihood of a future compensable claim.

Example, driver no seatbelt. Minor charge, 2 demerit points. But major injury claim if they are ever in an accident. A driver who isn't wearing his seatbelt is a higher risk of creating a payout. I can't see that conviction being lumped in with the same "minor" group as "failure to signal" even though they are both minor convictions and both have 2 demerit points.

A driver who gathers more demerit points is arguably a greater risk than one with more convictions and fewer demerit points. Number and severity of conviction have to be factors in rate calculation, no??? The quickest gauge of that seems to be demerit points which is what SAAQ (and other public insurers??) appear to be using. Private insurance companies may not use "demerit points" but they must be using a similar structure.
Yes demerit point would offer more detail, but then it would increase volatility in insurance premiums, which we smooth out by categorizing in only 3 categories. You can increase the sophistication of rating, but you want it to be understandable for all consumers involved, as well as fair for those purchasing insurance from you. If people don't understand your product, they won't buy your product. If someone gets one ticket and involved in no accident but receives a 50% increase because of it, and they have not had a ticket in the past 10 yrs, should they be penalized so severely? Volatility is not good for the industry, especially when penalizing people who have one off occurrences.

Plus people who get traffic tickets but are not involved in any accidents, should their insurance be significantly greater? Which would occur if you rated based on demerit points. Insurance premiums raise for those whose actions have resulted in their insurance companies paying out more money, such as third party liability claims. Consumers understand this. If I cause my company to pay out 10k because I hit someone resulting in their bodily injury and vehicle damage, of course I realize and expect to be charged a higher premium in the coming years until I prove myself a safe driver once again. And so that the company can recooperate their money from people like myself who caused higher than avg payouts.

Another example of how flawed a demerit point system would be is if for each demerit point you get a 10% surcharge. Then a person who gets into an accident and gets charged with careless driving and speeding and receives 8 demerit points will get an 80% surcharge on their insurance for 3 years? This is unreasonable from an industry standpoint as well as a consumer standpoint. So if they got 2 of these identical tickets in a 3 year span, they can expect to pay a 160% surcharge on their original premium. So if they pay $1500 a year, their premium will raise to $3900 a year. But under the conviction surcharge program, they would only receive a 40% surcharge for these 2 tickets, increasing their rates to $2100 which is more reasonable.

Yes they may be more dangerous drivers, but the point is that someone who receives demerit's does not necessarily cause or are involved in accidents.

And the system is built so that only a person who receives a lot of convictions and causes accidents will be penalized. Via the combination of Driving Record being lowered from a 6 to a 1, and the applicable conviction surcharge.
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