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Driver's Guide to Buying High-Risk Car Insurance
Driver's Guide to Buying High-Risk Car Insurance
Car insurance companies calculate rates for their policyholders based on each driver's risk rating. To insurers, this rating implies the likelihood the policyholder will be involved in an at-fault accident. They are required to pay costs associated with injuries or property damage caused by their customers (up to the coverage limit), and adjust their rates accordingly. Drivers who are considered "high-risk" are forced to pay higher car insurance rates.
So how is this rating assessed?
There are several factors involved and every insurer addresses them differently. Below, we'll explain some of the criteria insurers use when assigning a high-risk rating to their policyholders.
Reasons you may fall into the high-risk category
It's important to emphasize the term "high risk" means different things to each insurer. One company may consider you a lower risk than another company based on the same criteria, and therefore will offer you lower rates.
One of the most important factors affecting your insurance rate is your past driving history. If your driving record shows a few demerit points, you will not be automatically categorized as a high-risk driver. Much depends on the reasons for which you received the points. For example, a few tickets received for failing to signal is generally considered less important than a single 6-point ticket for racing.
There are many other factors that influence your rating. For example, motorists whose policies are canceled for nonpayment or late payment are also affected. These factors weigh less than your driving record, but will still have an effect on your rating.
The effects of being labeled "high risk"
Once your auto insurance company places you into a high-risk category, or labels you as a nonstandard motorist, your rates will increase - often dramatically. Nonstandard simply means your risk rating is higher than the average rating assigned to the insurer's policyholder pool.
Drivers can expect their premiums to increase at least ten percent if they are moved from a standard to a nonstandard group. This assumes minor infractions. High-risk motorists, however, can expect their rates to climb far higher. Depending on your insurer's reasons for placing you into a high-risk category, your rates might climb to two or three times their standard rates.
If your driving record is astoundingly bad (i.e. multiple DUIs, racing, reckless driving, etc.), you may find insurers are unwilling to extend coverage. However, you still have an option. An organization known as Facility Association functions as a last resort for those with "troubled" driving records. It's a less-than-ideal solution because your rates will be high, but coverage will not be denied to you.
How to improve your risk rating
Making the transition from a high-risk category to a lower-risk one requires time and diligence. You'll need to drive safely (of course), and avoid receiving demerit points and tickets. You'll also need to pay your premiums in a timely manner to avoid cancellation. Depending on your driving record, improving your rating might take years. This is because your car insurance company will want to ensure your future choices behind the wheel will not reflect those made in the past.
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