Car insurance for high-risk drivers
You may consider yourself a pretty good driver. You know how to handle a car on icy streets and maybe you're even confident negotiating narrow mountain roads at high speeds.
But even the best drivers in the world can receive a speeding ticket or become involved in an accident. 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.
What is a high-risk driver?
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 who get the lowest car insurance rates.
- Standard: Average drivers with good driving records.
- Nonstandard: Young, inexperienced drivers and drivers with many tickets and accidents or a reckless driving or DUI history are high-risk drivers.
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.
How people fall into a high-risk category
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 good driving record.
- Your profession: People who drive great distances for their job -- pizza deliverers, 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 expensive cars to insure to see which vehicles will cost you the most in insurance.
What to do if you're denied 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. Although you may be classified as a "high-risk driver," you may not have 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 it varies by insurer; some will look back as far as five years when assessing how risky a driver you are.
Many states use a point system that assigns a score according to the severity of an incident, says the III. And how long those points stay on your record varies by state.
Ask your insurer how long it will take for your points to fall off and your rates to improve.
In the meantime, drive carefully, don't cause accidents and pay your insurance bill on time.
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