If you’re considered a high-risk driver, you may find it a little more challenging to get cover. Some insurance companies will flat out deny coverage, while others will simply charge higher premiums than those in the standard tier. No matter who you go with, chances are you’ll likely have to pay a very high insurance rate.
What is a high risk driver?
There is no standard definition as to what exactly a high-risk driver is. However, most insurance companies will consider you a high risk driver if you are more likely to file a claim than the average driver. Generally, you may be considered a high risk driver if you fall into one or more of the following categories:
Your driving record
As far as car insurance is concerned, it’s hard to see beyond your driving record as a factor with the most impact on your risk status. If you’ve been involved in more than one accident within 3 years, these incidents will negatively impact your record even if you were not at fault for any of them.
High risk drivers tend to be young and male, and those who live in the city are considered higher risk than those who live in suburban areas or rural areas. If you also have traffic violations such as citations for speeding, you are very likely to be considered a high-risk driver, and will face significantly higher car insurance rates. Several serious violations can also cause auto insurance companies to rate you as a high-risk driver.
These include excessive speeding, reckless driving, illegal street racing, driving without a license or any traffic violation that results in a fatality. In order to make sure you know what your insurance company sees, you can view your driving record online today at the DMV.
Your credit history
Most insurance companies tend to factor credit history into decisions about insurance rates. Indeed, according to the Fair Isaac Corporation (FICO), about 95% of auto insurers do so. Insurers use what’s called a “credit-based insurance score,” which is not the same as a credit score. The National Association of Insurance Commissioners (NAIC) defines it as follows:
“A credit-based insurance score is a rating based in whole or in part on a consumer’s credit information. Credit-based insurance scores use certain elements of a person’s credit history to predict how likely they are to have an insurance loss.”
In other words, insurers rely on the score when evaluating the amount of risk that each driver brings. High risk drivers are typically charged significantly higher rates or denied coverage altogether.
When evaluating your application, auto insurance companies will also look at your history with past auto insurance companies. If there are gaps in your coverage, an insurance company will conclude that you’ve had periods of uninsured driving which is seen as a high-risk behavior.
If for whatever reason, you drop your car insurance and don’t begin another policy immediately; chances are you’ll be considered a high-risk driver once you start a new policy. A driver with a long and continuous history of coverage will in all likelihood be offered significantly lower rates than one with a gap or multiple gaps in their auto insurance coverage history.
Poor payment history
Having a poor payment history is a lesser-known risk, however if you have late or missed payments even for a single month, this could get you labelled a high-risk driver in the eyes of some insurance companies. If you cannot afford to pay your insurance on an annual or bi-annual basis, you’ll be better off paying your premiums by direct debit to ensure that you avoid missing any payments.
Other factors that could lead to you being deemed a high-risk driver include being convicted of a DUI, and being a very young or very old driver.
How to Get Coverage When You’re High Risk
Most American states run “assigned risk” programs. These programs are designed to get coverage for drivers who would be denied insurance coverage by insurance companies, but are required to be covered under U.S. state law. If you have been turned down by several insurance companies, you can join the assigned risk pool of drivers in order to get insurance.
The state assigns drivers to insurance companies based on the number of drivers they insure in the state. Note that this doesn’t affect the cost of the premiums you will be paying. You’ll still be paying higher premiums than standard drivers, although most states tend to restrict insurance companies’ freedom in setting rates and secure approval before they can use the new rates.
If you join the assigned risk pool and receive a quote for insurance that is excessive, it’s important to call your state’s agency in charge of regulating insurance. They may be able to help you find a way to get affordable car insurance.