It's embarrassing. It also defeats the purpose of speeding in the first place. You sit by the side of the road, twiddling your thumbs, watching the minutes tick by. This is the opposite of "speeding" to your destination.
Plus the ticket. According to U.S. Highway Patrol data cited by Statistic Brain, Americans pony up $6 billion for speeding tickets every year -- an average of $150 per violation.
And your insurance company wants its cut as well.
Costly Rules of the Road
A recent study by Bankrate (RATE) subsidiary insuranceQuotes.com reveals how much you can expect your insurer to ding you for violating traffic rules.
Crunching insurance data on a hypothetical 45-year-old married, college-educated, employed female with a clean driving record and excellent credit, driving a 2012 sedan when caught for speeding, IQ discovered that a single moving violation can raise a driver's insurance premium by as little as 21 percent (for speeding 15 mph or less over the limit) -- or by as much as 82 percent, for speeding to such an extent as to constitute "reckless driving."
Other violations and the financial hit examined by IQ include:
- Seat belt violation -- 5 percent hike to insurance premium on average.
- Driving solo in the HOV lane -- 18 percent.
- Failure to signal a turn or lane change -- 19 percent.
- Tailgating -- 19 percent.
- Driving drunk -- 93 percent.
Surprisingly, these rate hikes aren't even the worst news. The really bad news may be this: The insurance companies appear to be using traffic violations as an excuse to hike rates -- perhaps even more than necessary.
For years, we've been telling you about how insurance companies have been hiking rates in response to a weak stock market and low returns on their bond investments. Insurers depend on the profits from investing their premiums to raise money to pay out insurance claims down the road. When those investment gains don't materialize, though, the insurers must raise money by raising premiums.
As recently as one year ago, a similar study of insurance costs by IQ found that, for example, exceeding the speed limit by less than five miles per hour usually bumped insurance rates up only 5 to 10 percent. Even a 30 mph violation resulted in no more than a 15 percent hike in insurance premiums.
InsuranceQuotes.com notes that there's no direct, apples-to-apples way to compare these two reports. Last year's survey, for example, was derived partly from polling speeding ticket recipients about their experiences and partly from data provided by the nonprofit Insurance Information Institute. However, they went straight to the source for this year's report, mining data that carriers filed with state insurance commissioners and provided to Quadrant Information Services.
But still, quirks and caveats aside, the magnitude of the difference in fines cited in the two reports suggests there's been a sizable increase in rate hikes imposed for traffic violations over the past year.
How to Dodge the Bullet
- Go back to driver's ed. insuranceQuotes.com senior analyst Laura Adams has one suggestion: "Drivers who commit moving violations can take safety classes to improve their skills and remove blemishes from their records. Many of these courses are offered online and can be completed in just a few hours." Importantly, these defensive driving classes can also take away an insurance company's excuse for hiking your rates.
- Shop around. Just because one company thinks your speeding ticket should cost you more money doesn't mean everyone will want to put their hand in your pocket. Indeed, in exchange for winning a new customer, another insurer may be happy to overlook your offense. While you're at it, consider your coverage.
- Double down. If you love your current insurer, you may not have to switch. Michael Cicero, a veteran municipal prosecutor in Ohio, points out that you can sometimes avoid rate hikes for minor offenses when you have bundled coverage (e.g., homeowner's and auto insurance from the same company). This spreads the risk to the insurer among multiple areas, diminishing the importance of any one. Plus, because the insurer is is getting more business from a bundled policy -- and wants to keep you as a customer -- you may have an easier time getting the company to forgive a ticket and keep your auto premiums the same.
Motley Fool contributor Rich Smith and the Motley Fool has no position in any of the stocks mentioned.