Nevada to Use Cell Phone Offenses to Price Insurance Policies
The Nevada Division of Insurance (DOI) will be reviewing how insurers apply surcharges to drivers who’ve been caught texting or talking on a phone while driving, according to a bulletin issued by regulators last week.
The bulletin applies to all insurance companies in the state who adjust the price for an auto insurance policy depending on whether the buyer has violated the state’s hand-held device ban. If they do, they’ll have to submit data justifying the use of this factor.
The bulletin was issued because “It was brought to the DOI’s attention that there was some confusion about the applicability of cell phone violations to automobile insurance underwriting and rating,” Jake Sunderland, a public information officer for the DOI, told Online Auto Insurance News (OAIN).
Insurers regularly look at things like speeding violations to help determine how much to charge a driver for a policy. But before they do, they must also show that the violation correlates with higher crash rates and insured losses.
But cell phone violations are a relatively new element in the pricing equation. And if insurers want to charge higher prices to drivers who have a cell phone violation on record, they have to prove statistically that drivers with that violation tend to have higher insurance payouts compared with drivers who don’t have that violation on their record.
The bulletin specifically applies to a first violation of the state’s ban against talking or texting on the phone while driving. Unlike second or third violations, a first violation of the ban is considered a “non-moving violation,” which makes it somewhat less serious than later violations.
Sunderland said that the issue was brought to the attention of the DOI through “various channels” and that “the exact number automobile insurance companies that are using the first hand-held device violation in underwriting and rating remains unclear.”
Aside from the insurance implications, a ticket for talking or texting on a phone while driving in Nevada brings the following penalties:
- 1st offense: $50 fine
- 2nd offense: $100 fine
- 3rd & subsequent offenses: $250 fine
For more on the topic of texting violations and insurance prices, read “Will a Texting Ticket Affect My Car Insurance Rates?”
(Photo credit:Lord Jim)