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How Do Demerit Points Affect My Car Insurance?

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The demerit points system in Australia can be confusing enough, let alone trying to understand how it affects your car insurance.

So if you've ever wondered how your points influence your premium, read on as we untangle the mystery behind demerit points and your car insurance.

But first, a refresher: How does the demerit point system work?

Drivers in Australia start off with a clean slate of zero demerit points. Points start adding up if you commit driving offenses, until you hit a maximum threshold as determined by your state or territory and your license type. For example, Queenslanders on a full licence can accrue 12 demerit points but L- and P-platers can only have four.

Do I have to tell my insurer how many demerit points I have?

Your insurer may ask you how many demerit points you've accrued and under Australian insurance law you have a duty to answer accurately. Depending on the insurer, they may even reduce or refuse to pay a claim if you give the wrong information.

How do my demerit points affect my car insurance premium?

Demerit points are never a good thing, from the ticket that comes with them to your tainted driving record and of course, a possible spike in your car insurance premium. In general, the more demerit points you have, the higher your premium could be. This is because demerit points are a good indication of your safety and responsibility behind the wheel. More demerit points put you at higher risk for collisions, which could make you more costly to insure.

That said, there are plenty of risk factors that help shape your overall premium and demerit points alone don't necessarily mean you'll be paying through the roof for car insurance. It simply means your premium could be higher than it would be if you had zero demerit points.

So if I have zero demerit points, am I guaranteed a low premium?

If you have zero demerit points and if your insurer takes them into account when setting a premium, then you know your premium has not been affected. As demerit points aren't the only thing insurance companies take into consideration, it's impossible to say that your car insurance premium would be low just because you have a perfectly clean driving record. It can however be an encouraging sign!

Remember, insurers all vary in how they determine risk, so it's worth asking yours how demerit points affect your car insurance.