What merit rating means on your Massachusetts auto insurance.

What merit rating means on a Massachusetts auto policy

Merit rating is the mechanism an insurer uses to adjust your auto premium based on your driving record. In Massachusetts the standard version is the Safe Driver Insurance Plan, or SDIP. It is a point-based system: clean records earn credits that lower rates, and unsafe records accumulate points that raise them.

Every operator gets a code. A neutral record shows as code 00. Credit codes like 98 and 99 mean a discount. Surcharge codes like 04 mean added points and a higher rate. That code is applied to specific coverage parts before other rating factors, so it has a direct, visible effect on what you pay.

One thing to know up front: insurers are not required to use the SDIP. A company may develop its own merit rating plan and submit it to the Division of Insurance for approval. The SDIP surcharges and credits apply if your carrier has elected to use the SDIP, or if your policy is written through the Massachusetts Automobile Insurance Plan (MAIP), the residual market. Because of that, the exact codes and factors can vary by company. The framework below is the SDIP standard, which is what most Massachusetts drivers will see on a declarations page.

How the code and point scale is built

Your Operator SDIP Rating equals the sum of the surcharge points from the surchargeable incidents in your six-year policy experience period. The policy experience period is the six years immediately preceding the effective date of the policy. If you have no surchargeable incidents in that window, your total is zero points, shown as code 00.

In the statistical coding, 00 is a regular, neutral premium record. The two credit records sit at the top of the scale: 99 is the Excellent Driver Discount Plus, and 98 is the Excellent Driver Discount. Surcharge records run from 00 up through 45. So a two-digit code on your policy is not arbitrary. It is either a credit designation or the literal count of surcharge points against you.

That distinction matters when you read a declarations page. A 99 and an 04 sit in the same field, but they mean opposite things. If you want the full picture of how the SDIP fits into your overall premium, our Massachusetts SDIP guide walks through the plan end to end.

Decoding credit codes 99 and 98

Credit Code 99 is the Excellent Driver Discount Plus. It goes to any licensed driver with six or more years of driving experience and no surchargeable incidents in the six-year policy experience period. For experienced operators rated 99, the credit represents a 17% decrease on the compulsory coverages, Parts 1, 2, and 4, and on optional Part 7 Collision. In the residual-market rate manual this shows up as a factor of −0.170.

Credit Code 98 is the Excellent Driver Discount. It is assigned if you are not eligible for the 99 six-year credit, you have at least five years of driving experience, and you have no surchargeable incidents in the five years immediately preceding your policy’s effective date. For code 98, the credit represents a 7% decrease on the same coverage parts, a factor of −0.070.

The practical takeaway: the difference between 98 and 99 is essentially one clean year of driving experience, and it is worth a meaningful step in your discount. If you are close to the six-year mark, confirm your record supports the higher credit at renewal.

Decoding a surcharge code like 04

A surcharge code such as 04 simply means four accumulated surcharge points on the operator’s record. There is no hidden translation. The number is the point total.

Each surcharge point represents a 15% increase on the compulsory coverages (Parts 1, 2, and 4) and on Part 7 Collision for experienced operators. For inexperienced operators, each point represents a 7.5% increase. In the residual-market manual, the surcharge factor for code 4 is +0.600, that is 60%, for experienced operators and +0.300, 30%, for inexperienced operators. The scale rises in equal steps: code 1 is +0.150, code 2 is +0.300, code 3 is +0.450, code 5 is +0.750, and so on.

How do you reach four points? A common path is two minor traffic law violations, since each minor violation carries two points. There is also a relief rule worth knowing: the value of surcharge points for each surchargeable incident is reduced by one point if you have three or fewer surchargeable incidents on your driving record in the five years immediately preceding your policy’s effective date. So a small number of incidents may count for less than the raw point values suggest.

What counts as a surchargeable incident

The point values come from the type of incident. A minor traffic law violation carries two points; examples include speeding, failing to obey traffic lights, and minor criminal violations such as driving unlicensed. A major traffic law violation carries five points; examples include operating under the influence, leaving the scene of an accident, and refusing to stop for a police officer.

At-fault accidents are surcharged by dollar threshold. An accident is a surchargeable at-fault accident if the operator is more than 50 percent at fault and the claim payment is more than $1,000 in excess of any deductible. A minor at-fault accident is one where the claim payment, excluding deductible, exceeds $1,000 but is not more than $5,000. A major at-fault accident is one where the claim payment exceeds $5,000.

Two rules soften the edges. No surcharge points are assigned to your first minor, non-criminal traffic law violation in the five years immediately preceding your policy’s effective date. And an operator with a revoked or invalid license is not eligible for SDIP incentives, meaning no credits.

Which coverages merit rating changes

Merit rating does not touch every line on your policy. Four parts of coverage are impacted by the SDIP: the compulsory Parts 1, 2, and 4 and optional Part 7 Collision. The SDIP does not apply to Other Than Collision (Comprehensive) or to Limited Collision. So a surcharge raises your liability and Collision rates, but not your Comprehensive.

It helps to know what those compulsory parts now require. For policies issued or renewed on or after July 1, 2025, the Massachusetts compulsory minimums are Bodily Injury to Others of $25,000 per person and $50,000 per accident, Damage to Someone Else’s Property of $30,000 per accident, that is 25/50/30, with Bodily Injury Caused by an Uninsured Auto at 25/50 and Personal Injury Protection remaining at $8,000 per person. These increases were enacted by Chapter 275 of the Acts of 2024. The prior 20/40/5 minimums are obsolete for policies issued on or after that date. Since merit rating scales these coverage parts, a higher base limit means the same percentage credit or surcharge attaches to a larger premium. Our Massachusetts PIP guide covers what that $8,000 Part 2 coverage actually pays.

How to check and challenge your merit rating code

The Merit Rating Board maintains operator driving records, including traffic law violations, at-fault and comprehensive claim records, and out-of-state driving records, and reports this information to Massachusetts insurers. It computes and reports the merit rating code for each operator, reflecting at-fault accidents and violation points from the policy experience period. Insurers are required to report Comprehensive claims to the Board, and at-fault Personal Injury Protection claims with incident dates on or after April 1, 2008 with any monetary loss must also be reported.

At renewal, read your declarations page and confirm the code matches your history. If you believe an incident was not your fault, that a claim payment fell under the threshold, or that a code has not dropped an incident that has aged out of the six-year window, that is worth resolving. Questions about SDIP surcharges and credits can be directed to the Merit Rating Board weekdays 8:30 a.m. to 5:00 p.m. When we place or renew a personal auto policy, we review the merit rating code as part of the file so a stale surcharge does not follow you to a new carrier.