How North Carolina’s Safe Driver Incentive Plan (SDIP) Works

Responsible drivers know that safe driving isn’t just for protection: it’s also an easy way to save money. North Carolina’s Safe Driver Incentive Plan (SDIP) gives drivers a financial incentive to drive safely on our roadways.

Below, the auto accident attorneys from The Law Offices of Michael A. DeMayo explain how you can save money on monthly premiums and explore potential drawbacks of this unique state program.

The Good: Safe Drivers Save

Auto insurance companies charge higher premiums to drivers who violate traffic laws or cause an accident. In addition to fines and penalties, unsafe drivers are paying more every month to maintain the required insurance minimums.

North Carolina’s Safe Driver Incentive Plan rewards save drivers by offering them the lowest possible insurance rates.

Here’s how the plan works:

Convictions and at-fault accident points are distributed on a scale of one to 12. Serious violations or convictions (e.g., negligent homicide, hit and run accidents, street racing, etc.) are worth more points, while minor traffic violations (e.g., tailgating, minor fender benders, etc.) are worth fewer points.

For every point acquired a driver’s insurance rate increases by a predetermined amount. For example, one point equals a rate increase of 30 percent; five points equal an increase of 110 percent, and twelve points will increase your insurance rate by 340 percent.

Here’s another way of looking at the numbers: If the basic rate is $300, the difference in price for a driver with one point is $90; the difference for a driver with 12 points is $1,020.

The Bad: Property Damage Pitfalls

While it pays to drive safe, car accidents are, well, usually accidental. Even good drivers have a bad day once in a while.

When it comes to minor property damage like scratches and dings, it’s important to understand how the plan’s damage threshold works—particularly with regards to damage you cause to your vehicle.

Let’s say you’re running late. In a hurry, you hit your garage and scratch up the passenger side of your car. Looks like you might need some repair work and paint.

So, you call your insurance company to explain what happened. Your insurance will cover the damage, but you’re also on the hook for two SDIP points.

According to the North Carolina Department of Insurance, an “at fault accident resulting in total property damage (including damage to insured’s own property) in excess of $2,300 [pre deductible] but less than $3,850” incurs two SDIP points.

Points stay with a driver for three years immediately preceding the date of application (for those applying for coverage) or beginning with a policy renewal. Insurance companies call this the Experience Period.

For minor property damage, get a repair estimate before calling the insurance company to confirm the point penalty is less expensive than the cost of repair.

Moreover, if you already have points against your record, is it worth it to add two more for minor property damage? These questions should be addressed carefully on a case-by-case basis.

The Ugly: Government-Controlled Auto Insurance

Unlike other states, North Carolina’s Safe Driver Incentive Plan sets mandatory premium increase for different types of violations—other states allow insurers to set rates competitively.

In fact, North Carolina is the only state that uses a rating bureau (North Carolina Rate Bureau) and insurance commissioner to establish auto insurance rates.

Some critics argue that mandatory increases are punitive and used to subsidize the state’s worst drivers.

Moreover, in 2017, a statewide auto insurance increase of 2.2 percent was announced.

According to the rating bureau, the rate increase is the result of “…the increased frequency and severity trends primarily caused by distracted driving, more expensive repair costs, increase in miles driven and a 6-7% increase in deadly accidents…”

It pays to be a safe driver, but many North Carolina drivers don’t have a perfect driving record. Not sure where you stand? Request a copy of your driving record online.

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