High-risk auto insurance is a category of insurance policy designed for individuals more likely to file a claim. If your auto insurance provider determines you are at an increased risk of getting into an accident, you may need to opt for a non-standard auto insurance policy. Find out if you are likely to be considered a high-risk driver by your provider and why.
What is a High-Risk Insurance Policy?
A high-risk insurance policy is one type of benefits package provided by auto insurance companies. The prices for this policy are higher than average because the provider views you as having a higher chance of filing a claim based on various factors.
Who is Considered High-Risk?
There are a number of reasons you could be considered high-risk, including your age, driving record, and credit history. These include:
Drivers who recently acquired a license
If you recently acquired your driver’s license, it’s common for the insurance company to deem you high-risk. Young drivers aged 16-24 may face higher insurance rates because of their inexperience on the road, which elevates their risk of making a mistake and being involved in an accident.
Like new drivers, those aged 70+ are considered high-risk because they have higher death rates per mile than someone middle-aged. Vision and impairment of cognitive skills put them at an increased chance of collision on the road.
Drivers with a record
If you have a driving history of traffic violations, you can expect to pay a higher insurance premium. The most common moving violations include speeding tickets, illegal u-turns, and reckless driving.
However, note that if you require car insurance for high-risk drivers because of your record, you don’t have to stay in this category forever. Depending on where you reside, ticket violations can remain on your record for three years, while at-fault collisions and license suspensions can affect your insurance for up to six.
Drivers with DUIs and DWIs
Driving with alcohol or drugs in your system can ruin your life and harm other people on the road around you. In most states, driving intoxicated means getting behind the wheel with a BAC of 0.08% or greater if you are 21 or older. If you get a DUI or DWI, it can impact your driving record and put you in the insurance for high-risk drivers category.
Always have a plan for getting home that doesn’t involve getting behind the wheel if you’ve been drinking or using drugs. If you’re already in the high-risk category because of a DUI or DWI, the charge remains on your record and can affect your insurance for five to ten years.
Driver’s with poor credit or none at all
Insurance providers may look at credit-based scores to determine the insurance policy and rate they can offer you. If you have a poor credit history, an insurance provider may deem you unlikely to make payments on time or have a higher chance of needing to file a claim. Therefore, you could end up in the high-risk insurance category, requiring a special policy.
A driver with poor credit or no credit typically pays 50% higher insurance rates than someone with a good credit history. However, some states do not allow credit-based scoring for determining insurance rates, such as Hawaii and Massachusetts.
The Cost of High-Risk Insurance
The cost of high-risk insurance policies varies by state and by driver. Overall, high-risk drivers pay up to 84% more than drivers with standard insurance policies. Although the reason you’re in the high-risk category affects the cost of your policy, the rates for drivers with poor credit and those with a DUI are comparable.
How to Lower High-Risk Insurance Cost
Even though you might be classified as a high-risk driver by your insurance company at present, you don’t have to remain in this category indefinitely. If you want your insurance cost to decrease, there are some steps you can take.
- Taking defensive driving courses can help take points off your record
- Don’t drink and drive; avoid incurring any future charges
- Drive following traffic laws and stay within the speed limit to avoid tickets
- Build a good credit history by paying credit card bills on time, taking out a line of credit or a loan, and making timely payments
Age is one element of the high-risk category you have no control over, but if you get good grades in school or college you may be eligible for a good student discount. Your insurance rates are likely to drop once you are 25 years old or get married, provided you maintain a clean driving record and make your payments on time.
Learn More About High-Risk Insurance
Being on the road with other drivers always presents a possible risk, but the chances of filing a claim are higher for some drivers. Whether you have a history of being at fault in accidents or your credit scores are poor, it’s possible to recover from the high-risk car insurance category and reduce your car insurance rates in the future.
For more information on insurance coverage and where to shop for auto insurance quotes, use resources from Finance is us. We make it easy to get the financial support and details you need to make smart decisions about your coverage.
Disclaimer: All content on this site is information of a general nature and does not address the circumstances of any particular entity or individual, nor is the information a substitute for professional financial advice and services.