High-Risk Auto Insurance: How Much Does It Cost?

High-risk car insurance is typically more expensive than insurance for experienced drivers or those with a clean driving record. High-risk drivers are often deemed to be young or inexperienced, or those with one or more offences on their record, such as a speeding ticket, an at-fault accident, or a DUI. Other factors that can lead to a driver being considered high-risk include a lapse in coverage, certain car models, or poor credit. The average cost of high-risk insurance is $234 per month, or $2,802 a year, though this can vary depending on the driver's record and insurance company.

High-risk insurance for young or new drivers

Young or new drivers are often considered high-risk by insurance companies due to their lack of experience behind the wheel. This perceived higher risk of accidents results in higher insurance rates for young drivers. In addition to age, other factors such as driving record, credit history, vehicle type, and location can also contribute to higher insurance costs.

Young and new drivers are considered high-risk by insurers due to their limited driving experience, resulting in higher insurance rates. This is because insurance companies view inexperienced drivers as more likely to be involved in accidents, leading to higher claims. The good news is that being considered high-risk is not permanent, and rates tend to decrease as young drivers gain more experience and prove their safe driving habits over time.

Factors Affecting High-Risk Insurance Rates for Young or New Drivers:

• Age and Experience: Teen and young adult drivers pay higher insurance rates than older, more experienced drivers. For example, an 18-year-old driver can expect an average annual premium of $2,641 when added to a family policy, while a 40-year-old driver pays approximately $1,220 per year.
• Driving Record: Traffic violations, such as speeding tickets, at-fault accidents, or DUI/DWI convictions, will increase insurance rates for young drivers. The more infractions, the higher the rates.
• Credit History: Poor credit history is considered a risk factor by insurers, who assume a correlation between poor credit and a higher number of insurance claims. Improving credit scores can help lower insurance costs.
• Vehicle Type: Driving a sports car or a luxury vehicle can further increase insurance rates for young drivers as these cars are associated with riskier driving behaviors and higher repair costs.
• Location: Insurance rates vary by state and even by ZIP code. Factors such as accident rates, theft, or vandalism in specific areas can impact insurance costs for young drivers.

Tips for Lowering High-Risk Insurance Rates for Young or New Drivers:

• Shop Around: Compare quotes from multiple insurance companies, as rates can vary significantly between providers.
• Defensive Driving Courses: Taking a defensive driving course can help prove your commitment to safe driving and may result in insurance discounts.
• Improve Credit Score: Work on improving your credit score, as it can impact insurance rates in most states.
• Bundle Policies: Consider bundling your auto insurance with other policies, such as renters or homeowners insurance, to take advantage of potential discounts.
• Student Discounts: Young drivers who are students can often qualify for good student discounts by maintaining a certain GPA or completing driver training courses.
• Usage-Based Programs: Enrolling in usage-based programs, such as telematics programs that track driving habits, can help young drivers demonstrate safe driving and earn discounts.

While high-risk insurance rates for young or new drivers may be higher, there are still ways to mitigate these costs by improving driving records, taking advantage of discounts, and shopping around for the best rates and coverage options.

High-risk insurance after a DUI

A DUI conviction will significantly impact your auto insurance rates and will lead to you being classified as a high-risk driver. This classification will make it harder to find affordable insurance, as many insurers do not work with high-risk drivers, and the ones that do can be difficult to find.

The average cost of car insurance with a DUI is $3,655, which is an increase of around $305 per month. This increase is due to insurance companies considering you more likely to cause an accident and needing to mitigate the higher risk of paying out a claim.

The increase in insurance costs will depend on various factors, including your age, location, and insurance company. On average, you can expect your insurance rates to double, with increases of up to 165% possible. The length of time that a DUI will affect your insurance rates will also depend on your insurance company, but it will be at least three years and could be as long as seven years or more.

To find cheaper high-risk insurance after a DUI, it is recommended to shop around and compare quotes from multiple insurance providers. USAA, Progressive, and State Farm are often mentioned as offering competitive rates for high-risk drivers. You may also want to consider taking a defensive driving course, improving your credit score, or increasing your deductible to lower your premiums.

High-risk insurance for drivers with poor credit

Several factors can contribute to a driver being deemed high-risk, including a history of at-fault accidents, speeding tickets, or other infractions. Additionally, insurance companies consider drivers with poor credit to be high-risk. While high-risk auto insurance is a special type of policy, it is not vastly different from standard car insurance. The main distinction lies in the driver being viewed as more likely to file a claim. Consequently, high-risk drivers often face higher insurance rates and have fewer insurance provider options.

How Insurance Companies Calculate Risk

Insurance companies take several factors into account when assessing a driver's risk level. These factors include:

• Driving record: The presence of at-fault accidents, driving infractions, or DUIs on a driver's record will typically result in a higher-risk classification. Conversely, a clean driving record contributes to a lower premium.
• Commute distance: Longer commutes increase the chances of getting into an accident, which is factored into the risk assessment.
• Vehicle type: The belief that drivers of sports cars are more likely to drive recklessly than those driving family-oriented vehicles influences risk calculation.
• Age and marital status: Younger drivers are considered less experienced and, therefore, higher-risk. Being married is seen as a sign of greater responsibility, resulting in a lower-risk assessment.

Drivers with poor credit are often placed in the high-risk category by insurance companies due to the perceived likelihood of filing a claim. Poor credit history can significantly impact insurance costs, with drivers facing average annual premiums up to $2,260 higher than those with good credit scores. Improving your credit score is a way to lower your insurance costs over time.

Insurance Companies for High-Risk Drivers with Poor Credit

While some insurance companies may refuse to offer coverage to high-risk drivers with poor credit, others specialize in providing non-standard insurance policies. Among the major carriers, GEICO, Nationwide, and State Farm are known for providing relatively affordable coverage for high-risk drivers. USAA, a carrier exclusively for military members, veterans, and their families, also offers competitive rates for this demographic.

Tips for Lowering High-Risk Insurance Costs

High-risk drivers can take several steps to reduce their insurance costs:

• Improve your credit score: Raising your credit score can lead to lower insurance premiums, as it is one of the factors insurance companies consider when calculating risk.
• Take a defensive driving course: Completing a defensive driving course can demonstrate to insurance companies that you are taking steps to improve your driving skills and reduce your risk.
• Shop around for insurance: Different insurance companies assess risk differently, so comparing quotes from multiple providers can help you find the most suitable coverage at the best rate.

High-risk insurance for drivers with lapses in coverage

A lapse in car insurance coverage can have serious consequences, including financial penalties, higher premiums, and even the loss of your driving licence. In most places, it is a legal requirement to have car insurance, and driving without it can result in stiff fines or worse.

A lapse in insurance coverage occurs when an individual neglects to pay their premiums, when their insurer cancels their policy, or when they are switching between policies and cancel their existing cover before the new policy comes into effect. This gap in coverage can be as short as a single day but can also last much longer.

Consequences of a Lapse in Coverage

Financial Consequences

Driving without insurance is risky. If you are responsible for an accident and don't have insurance, you may be sued to pay for damages and end up paying for everything, including legal fees, out of pocket.

Higher Premiums

After a lapse in coverage, you may find it harder to get insurance at an affordable rate. Insurers view individuals with lapses in coverage as higher-risk and may charge higher premiums as a result. Policyholders with a lapse in car insurance pay an average of $602 per year for minimum coverage, almost $60 more than the national average.

Driving Licence Suspension

In some places, insurers are required to notify the DMV or Bureau of Motor Vehicles when an individual drops insurance or changes companies. As a result, a lapse in coverage may be noted on your driving record and could even result in your driving licence being suspended.

Legal Consequences

Most states require drivers to carry a minimum amount of auto liability insurance. If you own a car and allow this insurance to lapse, you may be violating the law, even if the car is not being driven. If you drive without insurance and cause an accident, you will be subject to legal penalties.

How to Avoid a Lapse in Coverage

To avoid a lapse in coverage, it is essential to consistently pay your insurance premiums and drive safely. Too many tickets or accidents on your record can cause an insurer to cancel your policy. If you are switching policies, ensure there is no gap between the end of your old policy and the start of the new one.

High-risk insurance for drivers with speeding tickets

If you have a history of speeding tickets, insurance companies will consider you a high-risk driver. This means you'll likely pay more for car insurance and have fewer insurance provider options.

According to a 2024 analysis by NerdWallet, the cost of car insurance goes up by about 25% after a speeding ticket. On average, a driver convicted of speeding will pay $2,486 a year for full-coverage insurance. However, the increase depends on factors like your location, insurer, and driving history. Some insurers don't raise rates after a single speeding violation.

High-risk insurance costs also depend on the severity of the speeding violation. For example, a speeding ticket for driving 1-5 mph over the limit will likely result in a smaller increase than a ticket for driving 21-25 mph over the limit.

In most states, your car insurance rates will increase for three years following a speeding ticket. After this period, your rates should return to normal if you maintain a clean driving record.

How to save on high-risk insurance

• Compare quotes from multiple insurers.
• Ask about discounts, such as low-mileage discounts if you work from home.
• Improve your credit score, as this can impact your insurance rates.
• Sign up for a defensive driving course, as some insurers offer discounts for completing these courses.
• Be cautious before filing collision claims, as these can increase your premium.
• Raise your deductible, as this can lower your premium.

Frequently asked questions