From High-Risk to Standard Car Insurance

Some drivers face higher monthly premiums than others because of criteria like age, gender, financial choices, and driving history. In fact, if you set off enough red flags in these areas, auto insurance companies could assess you as a "high-risk" consumer.

To avoid penalizing the general public for society's most reckless drivers, auto insurers divide the market into "standard" and "high-risk" pools. Drivers with high-risk car insurance usually pay significantly more money to maintain mandatory coverage compared to those with standard insurance.

On this page, we'll go over some of the top reasons for why you'd be considered a high-risk driver and how you can take steps to become less risky in your car insurance carrier's eyes.

Moving Violations

The most obvious reason for why you might end up in the high-risk car insurance pool is documented poor driving. Too many moving violations, such as speeding tickets, make you look like a hazard to yourself and others.

Completing a defensive driving course and pleading down your charges in traffic court could help lower your insurance premiums by removing points from your record. The points for these types of violations typically expire within a few years, though your car insurance company may go by a different deadline. The fewer points you have on your record, the fewer dollars you'll spend on auto insurance.

Car Accidents

When you make a lot of driving mistakes and get into multiple car accidents, insurers see a lot of financial risk when taking you on as a client. Thus, your monthly premium may be higher than average, or companies may choose not to insure you at all.

A new trend is for insurers to offer "accident forgiveness," which essentially gives drivers with clear records a free pass after their first accident, keeping their monthly premiums the same. However, if you don't have accident forgiveness, you may not be able to return to the standard insurance pool for a long time after an accident, even with impeccable driving habits.

Too Many Claims

Having the "high-risk" label doesn't necessarily mean you're a risk to others on the road. In fact, auto insurance companies may place you in this category even if you've never caused an accident.

How is this so? If you've been unfortunate enough to have your car broken into repeatedly, or you've requested coverage for one too many rocks through the windshield, insurance companies may decide the risk you'll file another claim is too high to keep you in the standard pool of drivers. By being selective about which claims to file, you can avoid those high-risk premiums.

High-End Automobiles

Insurers tend to perceive a greater potential for expensive claims when you drive a high-end vehicle (such as sports, luxury, or muscle cars) and therefore may consider you a high-risk driver.

On the other hand, relatively inexpensive cars with high safety ratings will typically land you a standard auto coverage plan. Weighing out that need for speed against your need for green will ensure you buy the best vehicle for your lifestyle and wallet. 

Negative Credit History

Depending on the state in which you reside, poor credit may also factor into a car insurance company's decision to place you into a high-risk pool. You can improve your credit in the following ways:

  • Pay off collections accounts.
  • Negotiate for removal of paid-in-full accounts from your credit report.
  • Open new credit lines and keep them in good standing.
  • Contest any inaccuracies in your credit report.

State of Residence

Even if you're not in the high-risk car insurance pool, you may pay a higher premium based on where you live. The rate in the most expensive state for auto insurance is nearly three times that of the cheapest market. Most people don't decide to move to a new state just to save on car insurance, but if you're considering a move already, research the average auto insurance rates in your future state of residence.

If you're struggling to find affordable auto insurance because of that high-risk label, some states have organizations set up to help you. For example, Michigan has the Michigan Automobile Insurance Placement Facility. Other states have state-sponsored coverage for low-income drivers.

Regardless of whether your state provides car insurance assistance, you'll need to improve your driving and financial habits if you want to get out of the high-risk insurance pool