High-Risk Car Insurance: Is It For You?
Got a concerning history on the road? Depending on the event, insurance companies see consider some of more expensive to insure than others. For example, if you have multiple accidents, violations, or claims on your record, insurance providers assume a higher probability for there to be another incident than someone with a clean record.
Regardless of your driving record, though, everyone needs car insurance. It's mandatory in 48 states, and even the two exceptions have strict opt-out requirements. Insurance is also crucial to your financial safety.
High-risk car insurance allows even riskier drivers to maintain coverage. Here's what to know before shopping for this type of policy.
How Is High-Risk Insurance Different From Regular Car Insurance?
High-risk car insurance covers people who are more likely to file a claim, according to insurers. The cost is typically higher than a standard-risk driver in a similar demographic would pay. According to one insurer, high-risk policies cost an average of 25% more.
High-risk policies offer the same coverage types as standard policies. However, depending on your risk, some insurance companies may limit your coverage options or require a high deductible. You should always be able to get the minimum coverage your state requires.
What Is a High-Risk Driver?
A high-risk driver is someone the insurance companies consider more likely to file a claim. The factors that typically indicate a high-risk driver include:
- Lack of experience: If you recently earned your driver's license or are new to the country and don't yet have a U.S. driving record, insurers might consider you potentially risky.
- Incomplete insurance history: If your insurance history shows a gap in coverage or an insurance company has ever dropped you as a customer, an insurer could flag you as high-risk.
- A specialty vehicle: Insurers may see a high-performance car as encouraging riskier driving.
- Multiple at-fault accidents: If you've caused more than one car accident, insurers can flag you as a risky driver.
- Moving violations: Multiple speeding tickets might push you into the high-risk category. For more severe violations, such as driving under the influence (DUI), one violation is often all it takes.
- Poor credit: Forty-four U.S. states let insurers consider credit scores when determining insurance rates. A low score could put you in the high-risk category.
- A dangerous neighborhood: Living somewhere with a high crime rate can increase your risk of vandalism and make you harder to insure.
"High-risk" is an insurance designation, not a legal one. The definition and qualifications can vary between insurers, meaning you could be high-risk with one insurer but not another. However, most insurers determine risk levels using similar criteria.
What Are the Typical Premiums for High-Risk Insurance?
The price of a car insurance policy depends on three key factors:
- The driver
- Their car
- How much insurance they need
If you're a high-risk driver, you'll pay more if you live in a busy city with a fancy car and high coverage levels. If you live in a small town with standard coverage, you'll likely pay less.
Being high-risk usually raises your rate across the board. How much more you'll pay depends on the insurance company and your risk profile.
A serious violation, such as a DUI, could put your high-risk rate at one and a half times or even double your standard rate. A single accident might raise your rate by hundreds or less, while multiple accidents could cost you thousands more.
If you're a high-risk driver, it's worth getting quotes from multiple insurance companies, including those specializing in high-risk policies.
Are There Options for Reducing High-Risk Insurance Rates?
Changes in Coverage
If you're a high-risk driver, you might be able to reduce your premiums by changing your insurance. One option is to ask for a higher deductible, which means you'll pay less per month but more out of pocket if you have an accident.
Another option is to reduce your coverage. This choice can be risky because you're on the hook for any uncovered damages if something happens. However, collision or comprehensive coverage might not be cost-effective if you have an older car. Dropping these coverages could reduce your rate even with a high-risk profile.
“ If you're a high-risk driver, you might be able to reduce your premiums by changing your insurance.”
Point Reduction Programs
Some U.S. states gauge driver risk using a "points" system. You receive a certain number of points for each traffic offense, depending on the seriousness of the violation. Insurers typically charge higher rates to people with too many points on their records.
Select states allow drivers to complete a driving skills course and earn point credits on their record. In Georgia, you can remove up to seven points every five years. Oklahoma deducts two points if you complete a state-approved defensive driving or driver compliance course.
Other states make you wait to have points disappear from your license. Missouri reduces your points every year you go without new ones, and Utah removes your points if two years pass without an incident.
Check with your state or local government for license point rules in your state.
Time and Patience
Sometimes, the only thing you can do to eliminate your high-risk driver designation is to wait. If you're a less experienced driver, you must build up your record for a few years to earn insurance companies' confidence. If you've had insurance violations, consistent on-time payments are the key.
Even accidents and traffic offenses will eventually disappear from your record. After three years, most mild to moderate incidents will drop, and you'll start to see rate decreases.
Some states only allow insurance companies to examine three years of a driver's record, while others allow 10 years. That longer period matters if you have a more serious conviction.
Shopping Around
Every insurance company calculates premiums differently. You'll pay extra as a high-risk driver anywhere, but that extra will be less with some companies than others.
Shop around for quotes. Be completely transparent about your driving history and the level of coverage you need.