Your Guide to High Risk Auto Insurance
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Each state in the country has established requirements for residents to carry auto insurance. But motorists who have been determined as “high-risk drivers” may find their coverage denied by conventional insurance companies. Consequently, they must turn to companies that charge higher premiums to insure non-standard drivers. The premiums are eye openers and can price some drivers out of their cars.
Some of the major insurers — Allstate, GEICO, MetLife, and Nationwide – will increase premiums based on a scorecard of liabilities.
What Factors Determine the High Risk Driver?
Insurance companies consider a high-risk driver a motorist with a greater probability of filing an expensive claim. Motorists that fall into the category include drivers with a DUI conviction, young drivers, those with lapsed insurance coverage, first-time drivers, and applicants with poor credit. The motorist’s driving record of the previous five years plays a huge role in how insurers determine risk. Finally, motorists may pay higher premiums if they reside in communities where there are a great number of accidents and violations. Let’s look at key factors:
In addition to paying fines or license suspension penalties for driving under the influence of alcohol or drugs, intoxicated motorists can expect to fork out a lot more for insurance. They may also be required to comply with gaining an SR-22 certification of buying minimum insurance once they get their license back. SR-22 coverage is typically the most-expensive premium available. A DUI conviction can influence insurance costs for at least 3-5 years.
Insurance companies typically check the credit of applicants for motorist coverage. Many will deny standard coverage for applicants with low credit, judging them unreliable and categorizing them as high-risk drivers. You can check your credit score for free at LendingTree.
With little driving experience and credit history, many first-time drivers of any age group can expect to pay higher insurance premiums for at least the first year before upgrading to standard insurance.
Young drivers have statistically proven to be among the largest group of motorists who get into accidents, gather speeding tickets, and get pulled over for a DUI. While young drivers typically pay higher rates for auto insurance, those with any infractions can automatically join the high-risk category. Teens may circumvent higher premiums at first by adding themselves to their parent’s policies, though, their parents may find themselves paying more for coverage.
Drivers of all ages may find it hard to get standard coverage if they drive high-risk vehicles such as sports cars, racing cars, exotic cars and motorcycles, or collectables. They may have to find insurance companies that specialize in covering high-risk vehicles.
Lapse of Insurance Coverage
Insurance companies don’t view a lapse in coverage mildly. Driving without minimum insurance coverage is illegal and getting into an accident or scrapes with the law without coverage opens the driver to the greatest financial risk of all. Expect to pay more for your premium following a lapse in coverage, but it may be adjusted down from the high-risk category after six months.
Drivers over 70
Some insurers put drivers over 70 years of age into a high-risk category based on statistics that these drivers may have lost mobility, have lengthened reaction times, and impaired visual acuity. In some states, senior citizens can take optional defensive driving classes to present to insurers for lower premiums.
Serious Driving Violations
Most everyone knows getting a DUI will jack up their insurance premiums. However, insurance companies look for other high-risk red flags in determining coverage and cost. These include infractions for:
- Driving without a license.
- Reckless driving.
- Road rage.
- Street racing.
- Excessive speeding.
- Hit and run.
- Serious accidents or traffic violations coupled with a fatality.
Finding the Best High Risk Auto Insurance Companies
Not all high risk insurers offer the same levels of increased premiums for non-standard drivers. As with all consumer products, buyers will do well to compare rates from reputable insurers. There are reputable insurance companies or subsidiaries of major auto insurance companies that concentrate solely on providing high-risk coverage. Consumers can search for free auto insurance quotes at LendingTree.
Every state maintains a listing of high risk insurers. Be sure to compare rates from companies that cover high-risk drivers in your part of the state. (You can search The National Association of Insurance Commissioners for contact information to the insurance regulatory agency for your state.) Some states maintain an assigned-risk auto insurance pool to insure drivers who are turned down by high risk insurance companies, but the premiums in the pools carry the highest charges of all.
Choosing a Reputable Insurance Company
Do homework on the companies that make your short list of competitive rates. The National Association of Insurance Commissioners maintains a Consumer Information Source that lists licensing information, consumer complaints, and financial data on insurance companies. Another helpful resource, A.M. Best, maintains an online Consumer Insurance Center that evaluates insurance companies based on their financial stability and performance.
Lowering the Rate
High risk insurers may evaluate mitigating factors to lower the risk and related premiums – if the applicant can provide accurate and official documentation. One common way is to improve your credit. A score of 650 or less is a red flag to insurance companies who view it as a sign that the individual is irresponsible.
Insurers may positively respond to individuals who take driving classes after receiving moving violations. Young drivers may document high grades or work experience that shows they are reliable.
Be sure to maintain the high-risk policy for at least six months. Changing companies (insurance hopping) will put high-risk drivers to the back of the line again for improved rates. Company loyalty matters. Search for companies that drop the surcharge for a traffic violation after three years from the infraction.
Remember that you don’t have to be a high-risk driver forever. Check motor vehicle department records to ensure that older infractions have been wiped clean. And ask for periodic rate reviews to confirm that high-risk premiums reflect improvements in your driving record or credit score.