High-risk auto insurance
Fact-checked with HomeInsurance.com
When you purchase car insurance, an insurance company reviews your background to determine how much risk you carry. The riskiest drivers pay the highest insurance premiums because they are most likely to file a claim and collect a payout from their insurance provider.
There are three main types of risk that insurance providers use to categorize drivers—preferred risk, standard risk and high-risk. Preferred risk drivers generally carry the lowest amount of risk, whereas high-risk drivers pose the biggest risk.
Understanding the level of risk you carry as a driver is important when purchasing car insurance. In this article, we’ll focus on high-risk drivers and explain how drivers in that category can avoid paying extremely high insurance rates.
What is a high-risk driver?
A high-risk driver is someone who poses more risk than other drivers. A high-risk driver may also be someone who isn’t eligible for insurance through a preferred provider. It also includes drivers who have an SR-22 form on their record following a serious accident or traffic violation.
A majority of high-risk drivers have a history of major traffic violations and insurance claims. They also tend to have poor credit scores. Additionally, a driver who has a DMV-registered vehicle and goes uninsured for a period of time will be considered high-risk when they purchase an insurance policy.
Sometimes drivers have no control over their high-risk classification. For instance, teens and younger drivers are usually deemed high-risk because of their limited driving experience. Similarly, drivers who rent their home are usually seen as higher-risk than drivers that own a home.
You don’t need a combination of offenses to be labeled as a high-risk driver. For example, a driver who received a DUI but has a perfect credit score will most likely still be classified as high-risk. Conversely, a driver who has a clean driving record but has a lapse in their car insurance will be deemed high-risk.
There are many different ways that you can be labeled as a high-risk driver, but one thing that all high-risk drivers have in common is that they pay a higher insurance rate.
Why do high-risk drivers get higher rates?
Insurance rates are personalized, regardless of the amount of risk a driver carries. There are a number of factors that can cause your insurance rate to increase. However, many factors that contribute to the high-risk driver designation also apply to insurance rate calculations.
Here are some of the most common reasons drivers get a high rate.
Having a low credit score
You might wonder why your credit score has such a significant impact on your rate. Insurance companies have associated drivers with a poor credit score to be more likely to file a claim. While it’s possible to have a perfect driving record and a poor credit score, the two usually go hand-in-hand.
Having a history of traffic violations and accidents
If you have a messy driving record with violations or at-fault accident claims, you’re not as safe as other drivers. It’s assumed that high-risk drivers are more likely to file future claims. Serious violations like a DUI will cause even higher rates.
Being a teen or young driver
Younger drivers lack the on-road experience that adult drivers have. Because teens are among the riskiest drivers to insure, they’ll pay more for their auto insurance.
Most young adults will start to see their premium reduce by age 25, assuming they don’t have other violations that could make them high-risk.
Not being a homeowner
Insurance companies prefer to insure drivers who own a home. Being a homeowner proves some level of financial stability, and it also gives drivers the ability to bundle their policies.
Most insurance companies offer a rate discount for drivers who combine their home and auto insurance.
Having a lapse in insurance
If you have a registered vehicle, you’re legally required to carry car insurance, regardless of how often you drive. Drivers who have a lapse in coverage—a period when they have no active car insurance policy—will pay a higher rate down the line.
Tips for avoiding high-risk car insurance rate
Getting categorized as a high-risk driver is never a good thing, but there are some ways you can reduce your rate:
- Raise your credit score: Improving your credit score, even by a few points each month, will eventually get you to a place where your rate will decrease.
- Improve your driving skills: Taking a driving safety course to improve your on-road skills will reduce your risk of an accident in the future. Many insurance companies offer a rate discount for drivers who take an approved class.
- Look for a better rate: If your rate has increased after an accident or claim, shop around for a lower rate from another provider a few years after the incident occurs.
- Avoid an insurance lapse: Take proactive steps to make sure your insurance doesn’t lapse. If you’re driving less, consider lowering your coverage limits. If you’re switching to a new provider, have your old and new policies overlap by a few days.
These things might not influence your rate immediately, but you can influence your premiums over time by making smart decisions.
- Insurance companies label drivers based on their level of perceived risk.
- Drivers can be viewed as high-risk if they have a poor credit score, have a history of traffic violations, are young and have a lapse in coverage, among other things.
- High-risk drivers usually have expensive insurance premiums, but there are ways to lower your rate.
- Raising your credit score, improving your driving skills, looking for a better rate and avoiding an insurance lapse can keep your rate more affordable.
Drivers aren’t always aware of their level of risk. If you have a history of at-fault accident claims, traffic violations, have a poor credit score or are a young driver, you might fall into the high-risk category. Drivers who have SR-22 forms, have had their license suspended or have DUI violations are almost always labeled high-risk.
Despite the fact that high-risk drivers pay higher insurance rates, there are ways to make your premium more affordable. Raising your credit score, taking a driving safety course, shopping for a lower rate and avoiding an insurance lapse can all mitigate your level of risk and subsequently lower your premium.