Everything You Need to Know About High-Risk Car Insurance

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  • Everything You Need to Know About High-Risk Car Insurance

Auto insurance companies were designed, built and are able to maintain their financial and legal standing by determining levels of risk and then deciding if the risk is worth taking.

It’s similar to jumping off a cliff into the water. When you’re younger, you may feel like you have little to no risk of getting injured. However, when you’re older, the risk is evident and you may or may not be willing to take it for a little fun.

Insurance companies have developed indicators that allow them to determine drivers with more risk — and then they deem them to need high-risk auto insurance.

High-risk auto insurance ultimately allows companies to control their risk levels. This is everything you need to know about high-risk car insurance and how it can affect you.

What Is High-Risk Auto Insurance?

High-risk auto insurance isn’t exactly what it sounds like. It’s not a specific policy designed to suit the needs of high-risk individuals, but it’s actually a designation given by insurance companies to people who meet the profile of risky drivers.

High-risk drivers aren’t prime candidates for insurance companies, so people who are designated into this bucket face higher premiums and fewer options for car insurance.

Which Factors Lead to High-Risk Drivers?

There are two basic factors that lead to a person needing high-risk auto insurance: driving and non-driving. Although the driving factors carry more weight in their eyes, non-driving factors are still an important way to determine if someone will be more or less cautious on the road.

Driving Factors

The most influential factors on a high-risk driver’s behavior chart are driving factors because they directly correlate to greater danger for the driver and others while on the road.

1. At-Fault Accidents

If a person is involved in an at-fault accident, chances are good they’ll see an increase in their monthly car insurance premium. If they’ve been involved in more than one at-fault accident within less than a year, especially if the accidents involved bodily injury claims, car insurance companies will label them a high-risk driver.

Insurance companies do this because they see driver patterns that lean toward the non-careful side of the road.

If a person has had one at-fault accident in a year, it could be due to bad luck or a freak accident. If they’ve had more than one at-fault accident within a year, that person is likely paying as much attention as they should be — and is bound to get into another one.

2. Reckless Driving

Reckless driving and accidents don’t necessarily go hand in hand. Reckless driving violations are issued when a driver is navigating their vehicle dangerously and without care.

Reckless driving could be going more than 30 miles per hour over the speed limit, getting caught racing another vehicle, blowing stop signs or red lights without hitting the breaks or something else that puts them and other drivers in harm’s way.

3. Traffic Violations

Traffic violations are a huge red flag for auto insurance companies and help them determine who is a risky driver out on the open road — or not-so-open road. States typically use a points system, where the more offenses a person commits, the more points they accrue.

Accruing points is not a good thing and has a direct effect on high-risk status. Violations like speeding carry a higher point hit than running a stop sign, but each will put points on a license.

4. Driving Under the Influence

Driving under the influence has one of the most major impacts on a person’s status as a high-risk driver. If someone is arrested for driving under the influence or driving while intoxicated, they almost immediately earn a spot on the high-risk-driver list.

Non-Driving Factors

Even though you may think high-risk drivers would be determined solely by their performance on the road, that’s simply not the case. Millions of pieces of analytics have been compiled to figure out which tendencies are most common among high-risk drivers, and these are what they’ve come up with.

1. Age and Experience

Records show that 16-year-old drivers are more liable to get into an accident than 40-year-old drivers, and insurance companies make sure the younger crowd pays for it. With inexperience on the road comes more accidents, tickets and so on and so forth, which insurance companies don’t particularly like.

Since drivers should be able to have auto insurance, companies offset their risk by deeming younger, more inexperienced drivers as high risk, charging them more in premiums per month.

2. Make and Model of Vehicle

Insurance companies have run report after report to determine if people who driver sportier cars are more likely to be involved in accidents and moving violations. They have determined that they are, so certain cars are placed in a high-risk category.

People who drive a two-door, convertible sports car have been determined to speed more often than those driving a four-door mid-level car. This means insurance companies are taking a bigger risk by insuring the former, so they make the sportster pay more in premiums in case something does occur.

3. Gap in Insurance Coverage

Drivers who have a lapse in auto insurance coverage are deemed to be less financially responsible than those with no gaps in coverage, so insurance companies determine they may also be less cautious on the road.

4. Credit History

It may not seem fair to bring a person’s credit history into the high-risk auto insurance equation, but companies use credit scores as an indicator of what sort of driver you are. People with poor credit are often labeled as high-risk and face higher insurance premiums because of it.

If you are in the high-risk-driver category, you may want to shop around to get the best price, try to raise your credit score and, most importantly, be more careful on the road. While your premiums may increase for a few years, they will go back down if you try your hardest to be safer on the road.

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The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.

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