Motorists who want to save money on their car insurance should do everything they can to avoid being labeled as high-risk drivers by insurance carriers.
“If you want to keep your insurance affordable, try to keep your driving record as clean as possible,” says Nicole Farr, a spokeswoman for Arizona Insurance Institute.
Things that can put you in the high-risk group include frequent accidents, traffic tickets, and convictions for driving under the influence (DUI) of alcohol or drugs says Kevin Foley, a New Jersey insurance agent.
“If you have been driving under the influence and you are caught, it will adversely affect the cost of your insurance,” Foley says.
How do insurance companies rate drivers?
Based on their driving histories, motorists typically are placed in one of three risk groups by insurance carriers:
1. Preferred drivers: These are divers with clean driving records, without traffic citations.
2. Standard drivers: These people have reasonably good driving records, but they may have some citations.
3. Non-standard drivers: These drivers represent a higher-than-average risk because of numerous accidents, citations, or DUI convictions. Other things that can put you in this category include:
- Allowing your insurance coverage to lapse. Insurers don’t like to see gaps in auto coverage.
- Driving a high-performance car. These cars are expensive to repair and are more frequently involved in accidents.
- Living in a community with a high rate of traffic accidents. You may be a safe driver, but if there are numerous accidents in your community, your insurer may charge you higher rates.
- Having very little driving experience. Young and inexperienced drivers are considered to be at high risk for filing insurance claims.
How can non-standard and high-risk drivers find affordable insurance?
As with any consumer product, shopping around and comparing offers is the key to savings – and many major carriers insure non-standard drivers. For example, a 2016 Washington State consumer guide lists Allstate, Farmers, Nationwide, Progressive, and Safeco as providers of non-standard auto policies to state residents.
You can request a list of companies that offer non-standard or high-risk car insurance in your state by contacting your state department of insurance. The National Association of Insurance Commissioners provides a contact list for state insurance regulatory agencies.
Another way to find non-standard auto carriers it to work with an insurance broker who can contact numerous insurers on your behalf, Farr says.
Be sure to compare several quotes from different insurers to find the best rates. Non-standard drivers often can find cost breaks by contacting small insurance companies that specialize in such policies, says Farr.
Even when you’re trying to cut costs, however, you should consider whether the policy you choose has adequate protection, says Janet Ruiz, a spokeswoman for the nonprofit Insurance Information Institute. “It’s important to get the right amount of coverage for your situation,” she says.
How can you tell if a non-standard insurance company is reliable?
When you buy an auto insurance policy, it’s important to make sure that the carrier is fiscally sound so it can pay off if you have a claim.
Before you choose a policy, you may wish to request information about its business practices and performance from the National Association of Insurance Commissioners’ Consumer Information Source. This online feature offers facts about insurance complaints, licensing, and finances.
Another source of information is A.M. Best’s online Consumer Insurance Center. A.M. Best rates insurance companies by reviewing their financial performance and fiscal stability.
What if no one will sell you a policy?
If you can’t buy non-standard insurance because you represent a very high claims risk, your state department of motor vehicles may place you in an assigned-risk auto insurance pool.
This is a last resort, since the cost of coverage typically is very high in such pools, says Foley. “You want to avoid the assigned-risk pool if you can.”
Insurance companies are typically required by government regulators to insure a share of a state’s high-risk drivers, based on the amount of policies they sell. Once you’re in an assigned-risk insurance pool, you may pay more than double the amount you would pay for a policy on the open market.
Before you can buy a policy outside the assigned-risk pool, you’ll have to demonstrate that you’ve become a more responsible driver. You may need to remain a part of the pool for two or more years, Farr says.
During that time, “you need to be prepared to pay some pretty high insurance premiums,” she says. “That’s where it hurts, in the wallet.”