Your Car Insurance and the new demerit system

It appears the Demerit Point system for licenses is here to stay, and by July 2022 the final phase will come into effect. In short, if you accumulate 12 demerit points you could lose your license and it could also influence your car insurance. It might be a good idea to use the year ahead to brush up on the rules of the road to make sure you don’t accumulate those points.

It’s no surprise that the terms of your car insurance state that all insured drivers should have a valid driver’s license. If your license is suspended or withdrawn, it would be your responsibility to update your insurance company as soon as possible. If you continue to drive the vehicle without a valid license, your insurance company won’t honour any accident or damage claims during this time.

When it comes to applying for new car insurance, insurers will look at your driving record and it’s likely that you would be considered a high-risk driver if you have a lot of demerit points. High risk drivers usually pay higher premiums.

Accumulating 12 demerit points can happen faster than you might realise. If, for example, you are caught driving 30km above the speed limit, you will receive six demerit points. Skipping a red light gives you three demerit points. Failing to stop behind the line at a stop street will earn you two demerit points.

Once the demerit system is implemented, each driver will start with zero points, but points will be added with each infringement. Motorists who reach 15 points will have their driver’s license suspended for three months.

There are several factors that could affect your insurance premiums, so it’s smart to get a new quote every year from your current insurer. You could also take it one step further by getting a quote from another insurer to assess if you could be getting a better offering elsewhere. It might take a bit of time and “admin”, but you could be saving money with a new or updated premium.

Did you know that MotorHappy takes the hassle out of finding new vehicle insurance? Click here to get started, we will shop around for the best insurance quote for you.

Shopping around also empowers you with knowledge to make better choices, and you’re more equipped to make decisions that are you good for your wallet.