High Risk Auto Insurance and Why Drivers are Denied Coverage
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No one wants to pay more than they need to for car insurance, but if you’re classed as a high-risk driver, then you may have a hard time finding low insurance premiums. That’s because car insurance companies use a range of factors — including your age, driving record, and even your credit score — to decide how much to charge you.
Fortunately, if you know what those factors are, you can take some steps to lower your premiums — or avoid being classed as a high-risk driver in the first place.
Here’s everything you need to know about high-risk car insurance, as well as where to find the lowest car insurance rates where you live.
What is High-Risk Car Insurance?
High-risk car insurance is essentially a non-standard auto insurance policy for drivers that are considered high-risk. Insurance companies may charge higher premiums to drivers that they think are more likely to get into an accident or file a claim.
But “high-risk” isn’t something that gets stamped on your driver’s license; it’s up to each car insurance company to determine whether or not you fall into a high-risk category.
Some factors are out of your control — such as your age — while others are things that you can work to improve over time, such as your driving history or credit score.
You can still get insurance coverage as a high-risk driver, but you may have to shop around a bit to get the best rates. You can use this handy tool to find affordable car insurance near you, or read on to learn more about high-risk car insurance.
Find Affordable Coverage for High Risk Drivers.
- Auto insurance companies base your insurance rates on your risk of filing a claim.
- Drivers fall into one of three major rating systems based on the insurance companies’ specific classifications. They are preferred-risk drivers, safe-risk drivers, and high-risk drivers.
- High-risk drivers are the least sought after by insurance companies and pay the largest premiums.
- A driver may be classified as high risk for insurance lapses, accidents, traffic accidents, poor credit, and filing many claims.
What Are Car Insurance Risk Tiers?
Car insurance companies use a rating system to determine your insurance rates based on the level of liability you present. Each company uses unique formulations to calculate your risk, so it’s essential that you do your research and compare car insurance coverage and rates with multiple carriers.
Most drivers fall into three of the following categories:
Preferred-risk drivers are the most sought-after by auto insurance. They receive the lowest rates because they pose the lowest risk of filing claims due to their history of responsible driving, no gaps in insurance coverage, little or no claims filed, and an excellent credit score.
Standard-risk drivers are good drivers who generally secure competitive rates. However, these drivers may have less-than-perfect credit and an accident or traffic violation on their record within the past three to five years.
High-risk or non-standard drivers pay substantially higher rates for their coverage. They are more likely to miss premium payments, let their insurance lapse, have accidents, moving violations, and traffic infractions, have a history of filing numerous claims, or have a poor credit score. In addition, high-risk drivers may not be eligible for higher liability coverage limits due to their risk factors.
6 Reasons You Might Be Considered a High-Risk Driver
Knowing whether or not you’re likely to be considered high risk is the first step to finding the best car insurance coverage. After all, if you don’t know how many speeding tickets or moving violations you have, it’s hard to know what type of insurance you need.
Here are six things that can influence the cost of your car insurance policy.
1. Young or First-Time Driver
If you’re a young driver or you’ve just gotten your driver’s license, then there’s not much you can do: Insurance providers will consider you a high-risk driver by default.
The good news is that if you avoid car accidents and driving violations, your premiums will eventually go down.
Still, in the meantime, you can expect to pay more for insurance than your parents or other experienced drivers, even if you have a clean driving record.
2. Multiple Traffic Violations or Accidents
The second thing that can increase your car insurance premium is your driving history. A single infraction won’t automatically class you as a high-risk driver, but if you’ve gotten into multiple car accidents or been pulled over for reckless driving more than once, then insurance companies are more likely to charge you for high-risk auto insurance.
In some states, speeding tickets stay on your record for five years or more, but in other states, it’s only one or two years. Once your driving violations drop off your record, then you may be eligible for standard insurance rates again.
3. Driving Under the Influence (DUI)
It’s a different story if you have a DUI conviction, which can raise your insurance rates by as much as 30-60% and may make it harder to find car insurance at all.
You may also need to maintain an SR-22 certificate in order to reinstate your license and show that your insurance policy meets your state’s requirements.
4. Poor Credit Score
Insurance companies don’t just look at your driving history. They also look at your credit score to determine whether you’re likely to file a claim. If this sounds a little unfair, you aren’t the only one to think so: A few states, such as California and Washington, have taken steps to prohibit this practice.
Still, if you don’t live in one of those states, you can expect most insurers to check your credit score when you request an auto insurance quote.
5. Gaps in Insurance
Another thing that auto insurance companies look out for is whether you’ve maintained continuous coverage. If you’ve let your car insurance lapse, then they may require you to get a high-risk policy, even if you’ve never been in an at-fault accident.
This is because they consider you less reliable than someone who has never canceled their insurance and always pays on time.
6. Expensive Car
Finally, the type of car you drive can also determine how much you pay for insurance. For example, it typically costs more to insure a Tesla than other types of electric cars. Expensive cars, sports cars, antique cars, and other specialized motor vehicles often result in higher insurance premiums.
Even if your dream car has advanced safety features and driver-assist systems, this may not lower your insurance premiums, because of the higher cost of repairs.
How to Find High-Risk Insurance
Although some insurers do not offer high-risk car insurance coverage, here’s a list of companies that do:
The insurance companies above are just a few known to insure high-risk drivers, but you must research and apply for coverage. This is your best bet to get approved for car insurance.
What Can I Do if I Can’t Get Approved?
If you have exhausted the car insurance application process and still can’t get approval, your options are limited, but there is hope. First, know that your “high-risk” status does not have to be permanent.
Next, identify areas you can control to increase your chances of getting your application approved in the future. Here are some things to get you started:
- Speak with an Insurance Agent. If you’ve been shopping around for car insurance online and have been denied, it may be a good idea to speak with an insurance agent. The insurance agent can review your car insurance application and let you know your options and what steps you need to take to get your application approved.
- Join an Assigned Risk Pool. Some insurance companies volunteer to participate in a state-assigned risk pool that offers insurance to drivers, regardless of their driving record. Assigned risk pools make sure every driver is insurable, but obtaining your car insurance through an assigned risk pool carrier is inevitably very expensive and may limit the type of coverage that you are eligible for.
- Improve Your Driving Record. Follow and obey all the road rules to avoid additional tickets, accidents, and irresponsible driving practices.
- Take a Defensive Driving Course. Brush up on your driving skills and offset the number of negative points and infractions on your record. Keep in mind that while doing so can reduce the points on your license, it doesn’t remove the violation from your driving record. All violations are taken into consideration by insurance companies.
- Repair Your Credit. Contact the three major credit reporting agencies: Equifax, TransUnion, and Experian, and request a copy of your credit report. Carefully review it for errors, omissions, old information, etc. If you locate any discrepancies, file a dispute to have each item in question investigated.
- Don’t Drive Without Insurance. Do not risk getting caught driving or being involved in a car accident without insurance. Instead, use ride-sharing companies like Uber or Lyft or use public transportation. You can also ask friends and family for rides.
Taking the necessary steps to increase your approval odds is a positive step toward changing your at-risk driver status. Check back with insurance companies often to see if your situation has improved and if you can secure less-expensive or better auto insurance for your vehicle.
Also, while you can expect to pay more for your auto insurance as a high-risk driver, it’s still important to compare rates to find the best price.
Get car insurance quotes for high risk drivers
How to Avoid Paying High-Risk Car Insurance
Now that we’ve gone over the bad news — that some aspects of high-risk car insurance are out of your control — what about the good news? Is it still possible to get cheap car insurance as a high-risk driver?
When it comes to car insurance, time is your friend. The longer you can keep a clean driving record and good credit report, the less you’ll pay for insurance. Here are four steps you can take to save money on high-risk car insurance:
1. Learn Defensive Driving
Some car insurance companies offer a discount to drivers who have taken a defensive driving course or other road safety classes.
These are cheaper and less time-consuming than you may think. The AARP even allows drivers to take their Smart Driver course online.
Keep in mind that this isn’t a surefire way to lower your insurance costs, and discounts may only be available for certain age groups, such as drivers over 55, or with certain insurers.
2. Maintain a Good Driving Record
The easiest way to avoid paying for high-risk car insurance is to drive safely. If you don’t have any driving violations on your record, then you’ll get better insurance rates.
Even if you do have minor traffic violations, they won’t stick around forever. Once your speeding tickets drop off your record, ask your insurer to lower your rates (or shop around for a different company that won’t see the infractions at all).
3. Pay Attention to Your Credit Score
If you live in a state where insurers are allowed to check your credit history, then you can lower your car insurance by improving your credit score. By paying your bills on time — including your car loan, if you have one — you’ll demonstrate to insurers that you’re a reliable customer both behind the wheel and in your financial life.
4. Consider Non-Owner Car Insurance
What happens if you move overseas for a while or decide to sell your car before buying a new one? Will you be charged higher rates in the future if you cancel coverage? One way to avoid this is by buying non-owner car insurance during that period.
This way, you’ll avoid a lapse in coverage, and you’ll be able to borrow a friend’s car or use a car-sharing program without the risk.
Choose the Right Car Insurance Company
If you’re a high-risk driver, the best way to get an affordable car insurance policy is to shop around for the best rates. Some insurers don’t offer high-risk policies at all, while others specialize in them. The best plan for you will depend on what level of coverage you need and whether or not you’re okay with a high deductible.
Our convenient search tool makes it easy to compare car insurance quotes and find the best insurer for high-risk drivers in your state.
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Frequently Asked Questions About High Risk Car Insurance
Can I join my parents’ insurance policy if my individual application is denied?
If you reside at home with your parents or are a college student who lives away from your parents’ house, you may be able to be added to their car insurance. However, keep in mind that most states will require that the vehicle is registered in one of your parents’ names in order to insure it on their policy. If your vehicle is registered in your name only, you will need to secure an auto policy in your name.
Will my insurance consider me a high-risk driver and cancel my car insurance because of my reckless driving ticket?
Yes, in most cases. A reckless driving violation is akin to a DUI or DWI in the eyes of insurance companies. It’s considered a major driving violation, which will cause a carrier to non-renew your auto insurance policy if they discover it on your record.
However, they must notify you of any impending policy changes, including cancellations, ahead of time to allow you enough time to secure a replacement policy..
What happens if I drive without car insurance?
Driving without insurance is against the law, and the financial and legal ramifications can be catastrophic. You may face jail time, pay exorbitant fines and legal fees, have your driver’s license suspended, or have your vehicle impounded.
How long will I be considered a high-risk driver?
The underwriting period for insurance companies is typically 3 or 5 years. You can’t remove the violations you have by driving more carefully or enrolling in a defensive driving course. It takes time.
How often should I apply for new insurance?
If your car insurance application has been denied by one company, you must shop around to find an insurance company that may approve you for coverage.
If you have been denied a high-risk insurance policy, take the necessary steps to increase your approval odds in the future. Clean up your credit, driving history, etc. Then, re-apply every six to twelve months.
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