When a motorist is issued a traffic ticket, there are two major concerns; points on license, and, insurance consequences.  Although some may hope that since they live outside Vermont, their home state insurance adjuster may not pick up on the violation.  Although there have been instances of missed violations in the past, a recent look at consumer mandatory disclosures of insurance companies, tell a different story, one that may not be noticeable at first, but over time can lead to substantial financial penalties; the gradual rate increase.

Most insurance companies place drivers in “risk tiers”.  This determination is based on a variety of factors such as driving and accident history, location of residence, age and even credit history.  In the mandatory disclosures it is revealed that “at renewal we review your payment, claim, driving and policy change history to determine if we will adjust your risk tier.”  

Driver history checks however, do not only occur during renewal periods.  The mandatory disclosure further explains that “once we’ve determined your tier, we look at additional information to refine and finalize your rate.”  

This leaves open the possibility for insurance companies to check driving histories at different times during a policy period pursuant to their right to “refine” risk tiers, which they can use as a basis to increase rates.

A Right to Gradually Rise

Although it is clear from the disclosure that “rate[s] will generally change when you “move to a new location, have an accident [or] receive a violation…” what is not clear is exactly how much a motorist’s insurance rates will be impacted.

A closer look at the disclosure reveals that insurance companies may not raise rates significantly at first.  Instead, they reserve the right to “gradually increase rates over time”.  

Certainly there are benefits to gradual increases however, if the rate increase continues to rise, when does it actually stops rising? This is a question with no answer on the consumer disclosure.

Lives can be busy, hectic and sometimes chaotic.  Most of the time, we just want things to work, without us expending too much effort in understanding the details.  Although understandable, the value of understanding your rights as a consumer and the rights reserved by car insurance companies may come in handy if you are ever issued a Vermont moving violation.