High-risk car insurance: How to shop for it
You may think you're pretty good behind the wheel. But if you rack up enough accidents, speeding tickets or even one serious infraction -- such as driving under the influence of alcohol or drugs -- you may find yourself classified as a "high-risk driver."
That means you won’t be able to buy car insurance in the standard market. Nonstandard or “assigned risk” drivers can expect to pay up to three times more for car insurance than drivers with a clean record.
Not all insurers treat high-risk drivers the same way. Some companies will assess much harsher rate penalties than others on high-risk customers, which means it's always wise to compare car insurance quotes before buying a high-risk policy. Finding the most forgiving carrier can ease the painfully high rates that typically come with being a high-risk driver.
Here are some other things you should know about how insurers handle high-risk drivers.
What is a high-risk driver, exactly?
Before selling you car insurance, insurers will check a number of things -- including your driving record and claims and credit history.
According to the Insurance Information Institute (III), drivers fall into one of the following categories:
- Preferred: Drivers with outstanding driving records, excellent credit and buy higher limits. This group gets the lowest car insurance rates.
- Standard: Average drivers with good driving records and average credit. This group get decent rates.
- Nonstandard: Young, inexperienced drivers and drivers with many tickets and accidents or a reckless driving or DUI history (also known as high-risk drivers). This group poses a lot of risk to insurers so pay more than the other groups for their car insurance premiums.
And then there is a fourth category: Drivers who can't convince any insurance company to sell them a policy.
This type of driver can still buy insurance through their state’s "assigned risk" pool but they'll typically have to prove they've been repeatedly rejected by car insurance companies, and their premiums will be two to three times higher than the national average.
Other ways to become a high-risk driver
In addition to having multiple accidents, speeding tickets or a DUI, there are other factors that can push you into the high-risk category. The following items will not necessarily dump you in the “assigned risk pool,” but they can increase your car insurance rates.
- Bad credit score. Although you can't be denied insurance altogether for a lousy credit score, it can be a factor in what an insurance company will charge you in most states.
- A lapsed insurance policy. If you failed to pay your car insurance premium and had your policy cancelled by another insurance company, other car insurance companies will likely find out and factor that into your premium. You'll also pay higher rates if you drove without insurance for a period of time -- in some states it has to be at least 30 days -- in the previous 12 months.
- A young driver with no record. Inexperienced drivers are among the riskiest around. It's important to establish and maintain a good driving record if you want inexpensive insurance.
- Your profession: People who drive great distances for their job -- delivery drivers for example -- are considered high-risk drivers by many car insurance companies. If you drive for work and not just to work, you probably need a business auto policy, not a regular personal lines policy.
- Your car: Certain types of high-powered cars, including some sports cars, can fuel higher auto insurance rates. These cars are expensive to repair and their drivers tend to make more claims. Check out Insure.com's list of the most and least expensive cars to insure to see how vehicle choice can impact your rates.
What to do if you can't get car insurance
If one company turns you down for auto insurance, keep shopping. Another may be willing to sell you a policy, and you want to stay out of the assigned-risk pool. Being classified as a "high-risk driver" doesn't necessarily force you to buy from your state’s assigned-risk pool.
Most car insurance companies will forget about your accidents and poor driving record if you maintain a clean driving record for at least three years. But this varies by insurer. Some will look back as far as five years when assessing how risky a driver you are. If the offense has fallen off your driving record, your insurer should no longer be able to use it to increase your rates.
Many states use a point system that assigns a score according to the severity of an incident. Insurers use a different system of "insurance points" that they associate with various traffic violations, accidents and claims. Just as with state points, the more severe the offense, the more points you're assigned.
You can ask your insurer how long it will take for your insurance points and related surcharge (increase in rates) to fall off so your rates can improve. In the meantime, driving carefully, avoiding accidents and paying your insurance bill on time should be your goals.
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