High Risk Car Insurance

If you are looking for high-risk car insurance, some companies do offer affordable car insurance policies to people despite their bad driving records. However, you’ll have to do some research into the best companies for high-risk insurance to find affordable rates.

High-risk drivers can also take steps to improve their driving habits and move to lower-risk categories, enabling them access to more affordable premiums and a wider variety of companies to choose from.

Read on to learn about high-risk, from how drivers are categorized to how to save on high-risk insurance. If you want to start shopping for the best high-risk car insurance today, use our free quote comparison tool.

How Drivers Are Categorized as High-Risk

Car insurance companies assess an individual driver’s personal information, statistical data, geographic information and numerous other factors when determining the cost of a policy. The insurance industry is extremely interested in statistics, and they review studies each year about various populations of drivers in order to accurately assess driving habits.

Car insurance companies divide policyholders into different categories of risk in order to determine how much rates should cost. Preferred-risk drivers are those who have the lowest chance of being involved in auto accidents and pay the lowest rates. Most people do not qualify for this top-tier of insurance and are classified instead as standard-risk drivers.

These are individuals who may have been involved in a small number of collisions throughout their lifetime or who have had a few traffic violations. The final and most expensive category of risk is high-risk; these drivers pay more than anyone else for auto insurance and have the most difficult time procuring insurance coverage.

Due to discrimination laws, drivers cannot experience rate increases due to race or religion. They can, however, have their rates be affected by age, gender and marital status. These statistical factors will have less bearing on a driver’s insurance costs than their personal driving history.

Different insurance companies will weigh various factors differently. For example, a single accident may cause a higher rate increase for one company than for another. Aside from car accidents, there are several other factors that can lead to a driver being categorized as high risk:

— Traffic violations, tickets or citations
— DUI convictions
— Inexperienced drivers
— People whose previous insurance policy was canceled
— Drivers between 16 and 25 years of age
— Drivers with bad credit

Teenagers, especially teenage males, pay more for young drivers car insurance than any other group of people. This is because male teenagers are involved in more auto accidents than any other demographic, and auto accidents are the leading cause of death for people that age.

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How Much High-Risk Drivers Pay for Insurance

The exact cost of auto insurance premiums varies from one company to the next, and no two drivers will pay exactly the same premiums. They will generally pay two to three times the amount of a preferred-risk insurance policy, although this is by no means a hard-and-fast rule.

Other factors that affect the cost of insurance for high-risk drivers include the state the policy is sold in, the type of vehicle being insured and the coverages carried on the policy. In other words, two people with the exact same driving history may still have different rates with their insurer due to differences in these factors.

If you were a very safe driver and were moved into a high-risk category due to an accident or citation, your rates may increase substantially more than you would expect. This is not because the base rate for insurance is higher; rather, it occurs when you lose a discount that caused your rates to decrease. The loss of a safe driving discount is often worse than the actual rate increase.

What Else Happens to High-Risk Drivers?

Sometimes, insurance companies cancel policies rather than increasing their rates. This occurs whenever a person’s risk level rises significantly, such as following a very expensive auto accident, multiple accidents in a single year or a DUI conviction. When this happens, the insurance company will issue a letter to the insured letting them know that the policy has been canceled and why.

After a policy has been canceled, it can sometimes be difficult for the insured to find a new policy. Some companies will refuse to insure people who are very high risk. Because you cannot drive a vehicle without insurance, this can be a massive inconvenience to some people. Fortunately, options are available for drivers who are unable to obtain regular auto insurance due to their risk category.

High-Risk and Assigned Risk Policies

Drivers who cannot obtain a policy through a regular insurance company can purchase their insurance through a carrier dedicated to providing coverage to high-risk drivers. These companies often specialize in direct sales as a way to reduce their operation cost, so you may be able to purchase the policy online through their website. The rates through these companies may even be lower than the high-risk rates with other insurance companies due to their reduced costs of operation.

For the highest risk drivers, states employ what’s called an “assigned risk” policy. This requires all insurance companies to pool their resources and underwrite insurance for people who are unable to obtain coverage any other way. These policies will be handled through a single company, but the funds for claims will be paid by another company or combination of companies.

People with assigned risk insurance policies have limitations placed upon them. They cannot carry more than very basic coverage, and they can only obtain full coverage insurance if their vehicle is financed and the lien holder requires it. It may also take longer for these drivers to have their claims settled due to additional and more complex paperwork.

Improving Your Car Insurance Risk Category

Fortunately, categories of risk are a fluid concept and people are able to move between them over time by engaging in the appropriate behaviors. High-risk drivers can reduce the cost of their policies by engaging in safe driving habits; over time, their rates will begin to decrease. In the meanwhile, they can take advantage of any car insurance discounts they may be able to qualify for:

— Multi-policy discounts
— Good student discounts
— Discounts for advanced driver’s education courses
— Discounts for installing safety devices in a vehicle

Any negative point against a person’s driver’s license will only count against them for seven years. Beyond that point, their driving record is wiped clean and they will be able to enjoy lower premiums as long as they maintain safe habits.

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Case Studies: Navigating High-Risk Car Insurance

Case Study 1: John – Overcoming a High-Risk Category

John, a 22-year-old driver with multiple traffic violations and a low credit score, found himself categorized as a high-risk driver. As a result, he faced challenges in obtaining affordable car insurance. However, through his determination to improve his driving habits and credit score, John was able to secure an affordable policy with a specialized insurer for high-risk drivers.

Over time, his commitment to safe driving allowed him to move into a lower risk category, resulting in reduced premiums and increased options for insurance coverage.

Case Study 2: Sarah – Exploring Assigned Risk Policies

Sarah, a 35-year-old driver with a history of DUI convictions, faced policy cancellations from multiple insurance companies. With limited options, she turned to an insurance carrier dedicated to providing coverage for high-risk drivers. Sarah discovered that these specialized companies often offer online purchasing options and competitive rates due to their reduced operational costs.

Through an assigned risk policy offered by the state, Sarah obtained the necessary coverage. However, she also experienced limitations in terms of coverage options and potentially longer claim settlement times.

Case Study 3: Michael – Improving Risk Category

Michael, a 19-year-old driver with a clean driving record, was unexpectedly categorized as high risk after a single accident. Although his rates increased significantly, he was determined to regain his previous lower risk category. Michael capitalized on available discounts, such as multi-policy and good student discounts, and invested in advanced driver’s education courses.

By demonstrating safe driving habits and maintaining a clean record, Michael gradually saw his premiums decrease. Eventually, he returned to a lower risk category and enjoyed more affordable insurance rates.

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