High-Risk Auto Insurance: Understanding The Ins And Outs

High-risk auto insurance is for drivers who are considered more likely to make a claim or be involved in a crash than the average driver. This includes drivers with a history of accidents, traffic violations, or DUIs, as well as those with poor credit or a lack of driving experience. While there is no standard definition of a high-risk driver, insurance companies typically charge these drivers higher premiums due to the increased probability of claims. High-risk drivers may struggle to find affordable insurance or be denied coverage altogether, but some companies specialise in providing coverage for these drivers.

High-risk driver characteristics

Driving History

• Multiple at-fault accidents: Drivers with a history of multiple accidents where they were at fault are often considered high-risk. Even if the accidents were not their fault, having multiple incidents on record can still increase the likelihood of being deemed high-risk.
• Moving violations: Committing multiple moving violations, such as speeding or running red lights, within a short period can contribute to a high-risk designation.
• Serious driving violations: These include DUI (driving under the influence), DWI (driving while intoxicated), hit-and-run incidents, road rage, and reckless driving. These violations are considered severe and significantly impact a driver's risk profile.
• Multiple comprehensive claims: Filing multiple insurance claims for various incidents can also lead to a driver being classified as high-risk.

Age and Experience

• Inexperience: New or inexperienced drivers, including teenagers and first-time drivers, are often considered high-risk due to their lack of driving history.
• Elderly drivers: Older adults may also be considered high-risk due to factors such as slower reaction times and increased susceptibility to injuries.

Credit Score

Poor credit history: A low credit score is linked to risky driving behaviour and a higher chance of filing insurance claims. As a result, drivers with poor credit may be deemed high-risk, although this varies by state.

It's important to note that the definition of a high-risk driver is subjective and can vary between insurance companies and states. Some companies may have more lenient criteria, while others may be more stringent. Additionally, the length of time a driver is considered high-risk can depend on the specific incidents and violations on their record.

High-risk insurance costs

• Higher Premiums: High-risk drivers typically pay higher insurance premiums than low-risk drivers. The increase in premiums can be significant, ranging from several hundred to over a thousand dollars per year.
• Impact of Driving Record: Multiple traffic violations, such as speeding tickets, accidents, or a combination of both, can lead to higher costs. Serious violations like DUIs or reckless driving charges can also result in higher rates and may require an SR-22 filing, which proves the driver meets the state's minimum insurance requirements.
• Credit Score Influence: In most states, a poor credit score can contribute to higher insurance costs for high-risk drivers. Insurance companies assume that individuals with poor credit are more likely to file claims. However, some states, including California, Hawaii, Massachusetts, and Michigan, prohibit the use of credit scores in determining insurance rates.
• Age and Experience: Young and inexperienced drivers, especially teens, are often considered high-risk and face higher insurance costs. The lack of driving experience is viewed as a factor that increases the likelihood of accidents and claims.
• Vehicle Type: Driving a high-performance sports car can also result in higher insurance costs. Sports cars are often associated with riskier driving behaviors, and the cost of repairs tends to be higher due to the specialized nature of these vehicles.
• State Variations: High-risk insurance costs can vary significantly from state to state. For example, a high-risk driver in Florida with a DUI on their record may pay around $4,000 per year, while a driver with the same profile in Maine might pay approximately $1,500.
• Non-Standard Policies: High-risk drivers who cannot obtain insurance from standard companies may need to purchase non-standard policies from companies specializing in high-risk insurance. These policies tend to be more expensive and offer less comprehensive coverage.
• Shopping Around: High-risk drivers can benefit from shopping around and comparing quotes from multiple insurance providers. Different insurers have varying criteria for assessing risk, and finding the right company can help high-risk drivers obtain more affordable coverage.

Finding high-risk insurance

• Shop around for quotes: Compare insurance quotes from multiple providers. The best high-risk insurance provider for you will depend on various factors, including your age, driving record, and location. Getting quotes from different companies will help you find the most affordable option for your specific situation.
• Consider non-standard carriers: If you have been denied coverage by standard insurance carriers, look into non-standard insurance companies that specialise in insuring high-risk drivers. These companies are more likely to offer coverage to drivers with less-than-perfect records. Examples of such companies include The General, Direct Auto, National General, and The General.
• Check your state's assigned risk insurance plan: If you are unable to find coverage in the voluntary market, your state likely has an assigned risk insurance plan or "insurer of last resort". This is typically a high-cost option, but it can be a last resort if all else fails. Contact your state's department of insurance for more information.
• Improve your risk profile: Work on improving the factors that contributed to your high-risk status. This could include taking a defensive driving course, improving your credit score, or avoiding gaps in insurance coverage. Over time, as your risk profile improves, you may be able to transition to a standard insurance policy.
• Consider usage-based insurance: If you don't drive frequently, consider usage-based insurance, which charges you based on how much you drive. This can be a cost-effective option for high-risk drivers who don't need to be on the road often.
• Look into telematics programs: Many insurance companies offer telematics programs that monitor your driving habits and reward safe driving behaviours with lower rates. However, these programs can also increase your rates if unsafe driving behaviours are detected.

Lowering high-risk status

High-risk auto insurance is a special type of policy reserved for drivers who are deemed more likely to cause an accident. While there is no standard definition of a "high-risk driver", they are generally characterised by a history of accidents, traffic violations, or a lack of driving experience.

Work Towards a Clean Driving Record

Focus on maintaining a clean driving record by avoiding traffic violations and accidents. While it may take time for past offences to be removed from your record, a consistent period without any incidents will help build confidence with insurance companies that you are now a safer driver. Most traffic violations and at-fault accidents will remain on your record for 3-5 years, but the exact duration depends on the laws of your state.

Improve Your Credit Score

In many states, insurance companies use credit scores to determine the likelihood of filing a claim. A higher credit score indicates lower risk, which can lead to reduced insurance premiums. Improving your credit score can be an effective way to lower your high-risk status and obtain more affordable coverage.

Take a Defensive Driving Course

Enrolling in a defensive driving course can help improve your skills behind the wheel and may even remove "points" from your driving record, leading to lower insurance premiums. Some insurance companies offer discounts to drivers who have completed these courses, so be sure to check with your provider.

Learn When to File Collision Claims

Before filing a collision claim, consider whether the damage is above your deductible amount and worth claiming. Minor issues may not be worth claiming as they can add up and contribute to you being categorised as a high-risk driver. Weigh the potential increase in insurance costs over several years against the immediate benefit of claiming.

Raise Your Deductible

Increasing your deductible will lower your insurance premiums because your provider will pay out less for claims. For example, raising your deductible from $500 to $1,000 can save you around 11% on your premiums. This strategy can also help reduce the number of claims you make, improving your risk profile over time.

Shop Around for Insurance Providers

Different insurance companies use varying criteria to assess risk, so it's worth comparing quotes from multiple providers. Some insurers may be more lenient regarding specific factors that influence your premiums, such as your credit score or driving history. Shopping around can help you find a provider that offers more affordable coverage for your specific situation.

High-risk status duration

The duration of a high-risk status depends on the insurance company and the state you live in. Typically, high-risk status lasts for three to five years, but some states and insurers will look back as far as five years. In Florida, serious violations like DUIs are on your record for life, but most violations fall off your record within three to five years. Crashes that involve DUIs or reckless driving could stay on your record for life, depending on the state.

Many states use a points system, where you receive a score based on how severe an incident is. Accumulating points increases your chances of being considered a high-risk driver.

To lower your premium as a high-risk driver, you can take a defensive driving course, improve your credit score, and adopt safer driving habits.

Frequently asked questions