High-Risk Insurance For Those With A Poor Driving Record
The National Highway Traffic Safety Administration (NHTSA) reported that more than 36,096 people lost their lives, and millions of others were injured in car accidents in 2019.
With millions of road accidents resulting in the loss of lives and damage to property, insurance companies paid out more than a trillion dollars in insurance claims in the last year alone. With this in mind, it is easy to see how difficult it may be for insurance companies to make a profit due to the rising number and cost of insurance claims.
Worldwide, many insurance companies don’t cover high-risk drivers, and those that take the risk require higher premiums. High-risk driver or not, you have the option of shopping around and finding the best insurance rates in the market. If you don’t know where to start, don’t worry because the financial sages at MoneyWizard.co can help you compare high-risk auto insurance quotes to find fair premiums regardless of your infractions. Click through to read more.
What Is High-Risk Auto Insurance?
High-risk auto insurance, also known as nonstandard auto insurance, is a specialty car insurance policy issued to drivers considered likely to get involved in an accident or to file an insurance claim. As such, this insurance policy focuses on covering high-risk drivers at an extra cost.
In the U.S., for instance, rising costs and increased insurance claims account for the important role of insurance loss control, which is a set of logical risk management practices aimed at reducing the likelihood of a claim being filed against a particular coverage. These practices involve identifying high risks and recommended actions that policyholders should take to reduce the likelihood of an insured risk from occurring.
As part of their loss control programs, insurance companies carry out a series of risk assessments on individual drivers before providing them with coverage. Unfortunately, not every driver makes the cut as either a preferred or standard driver. Drivers who don’t have clean driving records are often considered high-risk drivers, which means they are not eligible for auto insurance through their preferred insurance provider. This is where high-risk auto insurance comes in.
Who Is a High-Risk Driver?
Even if every driver poses a certain level of risk to an insurance company, some indicate a greater risk than others. When an insurance risk assessment report determines that you are a high-risk driver, it means you are likely to cause an accident and subsequently file for an insurance claim. As a result, your preferred insurance provider may decide not to provide you with insurance.
While there are things that you can do to steer clear of the high-risk category, some factors are out of your control. For instance, age can place you right in the middle of this high-premium category. According to high-risk car insurance providers, teenage drivers are considered riskier than experienced adult drivers because young drivers between 15 and 20 years of age are responsible for a significant number of auto accidents resulting from driver error.
According to the CDC, teens are more likely than older drivers to underestimate or not be able to recognize dangerous situations. They are also more likely than adults to make critical decision errors that can lead to serious crashes. Obviously, not all teens are poor drivers, but there is little young drivers can do to be upgraded to safe-driver status when the high-risk tag is a result of age. You can only attempt to never incur any traffic violations during this period as you gain hands-on experience. Even as being too young makes you a high-risk driver, being too old (65+ years) makes you risky as well. Past 65 years of age, the only thing you can do to avoid being classified as a high-risk driver is to avoid trouble on the road.
Also, notes that if you are a first-time driver, regardless of your age, you are classified as a high-risk driver. There are many reasons for getting a driver’s license and owning a car later in life, but these won’t be enough to remove you from the high-risk category. Fortunately, time and a clean driving record can upgrade you to a better category. Other factors that can make you a high-risk driver include lapsed coverage, poor or no credit, moving violations, DUI/DWI convictions, and other serious traffic offenses, such as hit-and-run incidents and speeding tickets.
How Does Being a High-Risk Driver Affect Your Coverage?
Insurance companies are in business to make money, and whenever your driving record threatens their profitability, they are going to hit you where it hurts—your finances. The fact that some insurance companies decline to cover all high-risk drivers should indicate what kind of trouble you are in. The few available insurance options that can accommodate your not-so-good driving record will demand higher insurance fees and monthly premiums.
This is not surprising considering that traffic violations are punishable by jail time and suspension or revocation of your driver’s license. So, before you push down the gas pedal and drive over the speed limit, remember that you could end up paying up to 25 percent more for auto insurance premiums until your driving record clears. A simple traffic ticket could stay on your record for about three years—resulting in significant costs, assuming your driving record remains clean during this period.
What to Look for in a Company and Policy
There are several limitations that come with high-risk auto insurance that you might need to consider before purchasing a policy. Unlike a driver with a clean driving record, a high-risk driver doesn’t have a lot of options to choose from. In spite of this limitation, you must ensure that your high-risk car insurance offers basic coverage, such as collision, liability, and comprehensive coverage.
At an extra cost, you can also get extension coverage, such as roadside assistance and total or complete replacement cost. It is crucial to ensure that your insurer keeps tabs on your decent driving record and reviews your insurance coverage costs annually. This will help ensure that your current record and insurance premiums reflect your better driving record on the road. Most high-risk insurers review their insureds’ coverage costs once a year to incentivize them to practice safe driving.
Just as in shopping for a standard car insurance coverage, take the time to look for the best rates. Companies make changes to their rates regularly, and the financial sages at MoneyWizard.co can help you find the lowest rates by comparing quotes from multiple auto insurers. Even so, you should brace yourself for steep rates, which is a reality in today’s marketplace.
How to Save on High-Risk Car Insurance
At MoneyWizard.co, we can help you find cheaper rates and the maximum coverage possible for high-risk auto insurance. We can help you in requesting online quotes from dozens of insurers. We will also compare these quotes and guide you in choosing the best plan. This will help you save significant time and money as compared to going with the first offer that comes your way.
In addition, you should consider taking a defensive driving course, which will be noted on your driving record. With improved driving skills and better discipline on the road, you might transition to a standard policy sooner. This will enable you to pay normal insurance rates for your car insurance within a shorter period.
Frequently Asked Questions
1. How much does high-risk auto insurance cost?
A poor driving record will cost you more in car insurance premiums. Riskier drivers are considered more likely to cost the insurance company money, and this is why they are charged exorbitantly. The cost of high-risk auto insurance, however, varies from one provider to another, and this usually depends on the factors that made you a high-risk driver.
A high-risk driver can expect to pay between 10 and 50 percent more for auto insurance premiums. In the U.S., insurance companies generally charge high-risk drivers about 25% more to cushion themselves from your risks on the road. This means that while the average driver pays approximately $1,450 in auto insurance premiums per year, a high-risk driver will pay about $1,800 to get the same coverage.
2. How long are you considered a high-risk driver?
Fortunately, being labeled a high-risk driver doesn’t last forever, especially if you can maintain a clean driving record going forward. For teenage drivers, the wait can last a couple of years, or until you are at least 25 years old. However, older drivers over 65 years of age will always be considered risky. For other age groups, it can take between six months to ten years to clear your tainted driving record.
3. What if I can’t find car insurance?
If you can’t find car insurance, it’s probably because you are looking for standard coverage when, in fact, you are a high-risk driver. Try searching for insurance companies that specialize in high-risk auto insurance. If this fails, you will want to learn more about your state-assigned risk pool.