How to Tell if You'll Be Given a High-Risk Auto Insurance Rate
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You have to have auto insurance in order to drive a car, but how much you pay for that insurance varies widely depending on your circumstances. One of the biggest factors in how car insurance companies decide how much your premium will be is whether or not you’re considered to be a high-risk driver. This essentially means whether or not you’re seen to be more likely than the average driver to make a claim.
If you’re considered to be a high-risk driver, insurance companies can raise your rates, or even deny you coverage, in order to protect themselves. It’s a good idea, then, to understand what could make an individual high-risk so that you can determine whether or not you might fall into this category. Here are 10 reasons that a car insurance company might consider you to be high risk.
Why a car insurer might label you as high risk
Though every insurer is different — each follows its own set of qualifications for what makes a driver high risk — there are several common reasons across insurers why you might fall into this category.
Reason 1: You’ve been in a serious accident. A serious car accident, meaning one that involves significant damages or injuries, could very well push you into the high-risk category.
Comparatively, something more like a fender-bender may also raise your rate, but usually only temporarily.
Reason 2: You’ve had a DUI. Though the particulars vary by state, if you’ve been convicted of driving under the influence, your insurance rates will be high.
DUI convictions usually stay attached to one’s record for five years, and they can result in you being denied coverage completely.
Reason 3: You have a violation on your record. Violations such as speeding, reckless driving, driving without the appropriate paperwork (license, insurance, registration), or the like can cause higher insurance rates.
If you’ve had multiple violations or a suspended or terminated license, this can take a toll as well.
Reason 4: You live in a certain area. Car insurers also look at the characteristics of your location when determining your premium. If you live in a highly populated area or an area that has a higher likelihood of accidents, you could see an increase in your rates.
Reason 5: You’re of a certain age. If you are a teenaged or even young adult driver, or you are age 70 or older, you will be more likely to pay more for your premium. In general, drivers tend to get riskier — and thus rates tend to increase — as they get older.
Though some states do ban using age as a factor in auto rates, in others this is pretty standard.
Reason 6: You’re new to driving. Regardless of age, if you’re a new driver, you will be given a high-risk rate. This makes sense, as new drivers do not have any driving history for auto insurers to reference as they choose those drivers’ rates.
Reason 7: You don’t have any prior insurance. Unless you are a brand new driver, having no prior insurance leads car insurance companies to believe that you have probably driven without insurance at some point, which is illegal. Understandably, this makes you out to be a riskier choice for them.
Reason 8: You drive a high-risk vehicle. If you have a particularly expensive or unique vehicle, such as a collectible or a sports car, you will likely be considered a high-risk driver. This is because the repairs on vehicles like these are expensive, and even insurers who specialize in this area won’t come cheap.
Reason 9: You have poor credit. Because many car insurers see a correlation between how well a person pays his or her bills and whether that person will pay his or her premium on time, they will likely check your credit score and use this as a factor in deciding your rate.
So, assuming you don’t live in one of the few states that doesn’t allow credit scores to be used in ratemaking, if you have poor credit, you will likely be placed in the high-risk group.
Reason 10: You don’t own a home. Though many insurers do not factor homeownership into their rates explicitly, owning a home is often seen as coinciding with stability, and so they may offer discounts to homeowners.
Therefore, while not owning a home may not quite put you in the high-risk bucket, it can prevent you from getting the best possible rate.
So, are you considered to be a high-risk driver? If you fall into one of the classifications listed above, you very well could be. But you can recover from receiving a high-risk label over time by maintaining a clean record and driving safely. You can also be on the lookout for discounts or switch to an insurer that specializes in high-risk drivers.