The livelihood of car insurance companies relies heavily on their ability to assess risk. If they did not take the time to analyze risk factors in potential clients, it would be hard for them to uphold financial and legal stability.
Car insurance companies want to feel like you are at least somewhat of a safe bet before they take a leap of faith and sign up to cover you. In today’s day and age, insurers have risk assessment down to a science and have developed certain standards by which they measure risky drivers.
Drivers with a poor driving record will typically have to pay higher premiums than their safe-driving peers, which is why it’s important to know what factors these companies are looking at the most. Here are some of the basic key points that you should know about high-risk car insurance.
What Is High-Risk Car Insurance?
When you first hear the phrase “high-risk car insurance” you might immediately think that it’s a specific type of policy tailored to meet the needs of risky drivers. In actuality, the term “high-risk driver” is a label that is placed on drivers with poor driving records by insurance companies to set them apart from the rest.
High-risk drivers are drivers who have proven to be at a greater risk for accidents, theft, vandalism or traffic violations. Drivers who get thrown into this pile are more likely going to have to pay higher premiums and will have a lot less options for car insurance.
What Factors Make Someone A High-Risk Driver?
When it comes to being determined a high-risk driver, there are two main factors: driving and non-driving. Both are important, although more significance is given to the driving factor. Both are used to assess how safe of a driver a person is on the road.
Since driving factors carry the most weight, let’s begin breaking down these first:
- At-fault accidents: When you are the cause of a car accident between you and another driver, you can expect for your car insurance premiums to go up. If you have been found at-fault for multiple car accidents, especially if they are all within a year, you will be labeled a high-risk driver. This is especially true if any of the accidents you have caused resulted in bodily injury claims. Needless to say, if a driver is getting into multiple accidents a year, car insurance companies will simply view this as being too costly, and therefore, high-risk.
- Reckless driving: This one might seem obvious, but reckless driving isn’t exactly considered safe or responsible. Reckless driving is when a driver is operating their vehicle dangerously or carelessly. Examples of reckless driving are:
- Driving more than 30 miles per hour above the speed limit.
- Racing another vehicle on the road.
- Driving past stop signs and red lights.
- Anything that can put you and/or other drivers in danger.
- Traffic violations: A record chalk full of traffic violations sends the message to insurers that a driver is disregarding the rules of the road. Most states keep track of this through the means of a point system. When it comes to traffic violations, earning points isn’t a good thing. The more points you have, the worse your record appears. Speeding will earn you more points than rolling a stop sign, but both offenses will add points to your license.
- Driving under the influence: Driving under the influence (DUI) is one of the most serious offenses that a driver can commit. One DUI arrest can get you straight to the top of the high-risk-driver list.
Non-driving factors function a little bit differently. These are factors that have nothing to do with your driving performance, and more to do with statistics and demographics. While non-driving factors are less significant to insurance companies, they still play a role in whether you are determined high-risk or not.
Car insurance companies have done extensive research and compiled an ample amount of analytics to figure out the most common correlations amongst high risk-drivers.
Here are examples of non-driving factors that insurance companies consider:
- Age and driving experience: Statistics have shown that teenage drivers, specifically 16-year-olds, are far more likely to be involved in a car accident than their 40-year-old peers on the road. Knowing this, car insurance companies hike up the premiums for teenage drivers.
- The type of car you drive: If you drive a sports car, you might have to pay higher insurance premiums. Insurance companies ran the data and came to the realization that drivers behind the wheel of sportier cars tend to get in more accidents than those who do not. Because of this finding, certain types of sports cars have been placed in a high-risk category.
- Insurance Coverage Gaps: If you’ve taken a hiatus from being insured, you run the risk of appearing less financially responsible. Furthermore, car insurance companies associate this with being less careful while driving. For this reason, it is important to make sure that you don’t allow for a lapse in car insurance coverage to occur.
- Credit history: Many insurance companies take a person’s credit score into consideration when assessing their record for high-risk car insurance. Drivers with bad credit are usually seen as being high-risk, and therefore will have to pay higher insurance premiums as a result.
If you are currently deemed a high-risk driver, all is not lost. You can take strides to get yourself out of this situation by being a safer driver on the road, raising your credit score, and paying attention to driving laws. In a few years, your premiums can go back to normal if you succeed in getting out of the high-risk category.