Insurance companies profit by carefully calculating probability and then accounting for it. Your insurance premiums are closely tied to your risk factors; the more at-risk you are, the higher those premiums will be. But that doesn’t mean that you can’t get affordable insurance just because you’ve had a few violations.
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What Makes you High-Risk?
You may be deemed high-risk if you have received a violation of any kind. There are minor and major violations, ranging from parking fines, moving violations and traffic violations to drunk driving and more. The most serious and destructive violations include:
Driving Under the Influence (DUI)
A DUI, also known as a DWI, can have a big impact on your car insurance premiums. It’s a citation that results in more bodily harm and property damage than any other, and it’s also connected with more death benefit payouts than any other type of driving citation, making DUIs a huge red flag for all insurance companies.
If you have a recent DUI conviction on your record, you’ll struggle to get comprehensive insurance coverage for a reasonable price, but there are a few things you can do, as discussed in our guide to Getting Car Insurance with a DUI.
Racing and Speeding
Speeding increases your risk and many insurance carriers will charge you over $100 more for every speeding ticket that you receive. If you’re charged with “Racing”, the penalties are more severe and you may be charged an additional $1,000 a year.
It only makes sense, as street racing turns you into a high-speed liability. Your car insurance premiums increase because you’re more likely to do harm to yourself, your car, your passengers, and all innocent bystanders. It doesn’t matter how good of a driver you think you are, in the eyes of an auto insurance company, you’re an expensive disaster waiting to happen.
A car accident that was caused by you and led to significant payouts by the insurance company can have a massive impact on your auto insurance rates.
Collision coverage and liability coverage are essential components of any insurance policy and if there is extensive property damage and motorist injuries, resulting in major repair work and liability claims, the provider will be hit with a sizable bill.
It should come as no surprise, therefore, that an at-fault accident can increase your insurance premiums by over $600 a year.
If you’re cited for reckless driving, your premiums may increase by anywhere from $300 to $1,000 a year. The risk of bodily injury and property damage increases, as reckless driving is defined as driving without care and putting yourself and others in danger.
Other High-Risk Factors
You are also considered to be a high-risk driver if you’re young and male, as young drivers are significantly more likely to claim than drivers aged 25 or older and male teen drivers are twice as likely to claim as females. That’s why young drivers pay higher car insurance rates on average.
But your demographic and driving record aren’t the only things that can prevent you from getting a cheap auto insurance policy. You’ll also be charged higher rates if you:
Have a Poor Credit History
Your credit score impacts pretty much everything that you do financially. It can reduce your chances of getting a credit card or mortgage; it can stop you from getting security clearance and securing the job of your dreams.
Believe it or not, your credit score is also considered by your insurance provider, as studies suggest that bad credit policyholders are more likely to claim.
Live in a High Claim Area
The best safety features and the safest cars won’t matter much if the driver lives in a high claim area and drives a car that is frequently stolen. In this case, you’re paying for the mistakes of others as the insurance company tries to balance its books.
Have no Driving Experience
Your experience is key, so your driving history will always be factored into the equation when applying for car insurance quotes. If you have some experience behind you and haven’t made any claims, you can secure lower premiums. If not, you have no proof that you’re a good driver or a safe driver and will be considered a risk.
Live in Rented Accommodation
Your credit score isn’t the only surprising criteria considered by insurance carriers. They will also consider whether you are a tenant or a homeowner, with the latter offered lower premiums on average. Again, it all comes down to probability, as studies suggest that renters are more likely to claim than homeowners.
How to Get the Cheapest Car Insurance
As noted above, all insurance companies calculate risk and probability to determine how much of a liability you are. This is true for life insurance, homeowner’s insurance, and pretty much all other forms of insurance. Your goal, therefore, is to reduce that risk, keep that liability to a minimum, and make sure you look like a prime candidate in the eyes of car insurance companies.
To get cheap car insurance, therefore, just keep the following in mind and you can secure some car insurance discounts:
Choose the Right Car
A new car can reduce your premiums, especially if it comes with a high safety rating and has anti-theft features installed. SUVs have the highest safety ratings and can save you a lot of money when dealing with major insurers like Geico, State Farm, and Allstate, but there are some highly insurable sedans and smaller cars as well.
Look for the safety rating, check for an anti-theft device, and scour the rates before you buy your car.
By completing a defensive driving course, you can prove to your insurers that you are a safe driver who knows what they are doing on the road, thus securing a lower rate than you would get if you didn’t have that all-important certificate.
Improve your Credit Score
A few points can make a big difference, netting you a policy discount and giving you more options if you ever need to apply for a new line of credit or loan.
By taking out different types of coverage with the same provider, you can benefit from bulk rates, known as “bundling”. Like a multi-car discount, you’re essentially getting wholesale rates on your insurance policies.
Providers like Progressive, Nationwide, State Farm, and Geico offer discounts when you bundle car insurance with home insurance, life insurance, and more.
Bide Your Time
Time is your friend when looking for the best car insurance rates. If you have multiple violations and you’re still a teenager, then making do without a car for a while could save you a small fortune. Not only will those violations expire, but you’ll be a little older and will therefore not be considered as much of a risk.
You’ll still be considered high risk as a new driver, but there will be significant savings to make, nonetheless.
Bottom Line: Getting the Cheapest Insurance Policy
Being high risk doesn’t mean you can’t get insured. It just means your car insurance policy will cost more than someone who has a clean driving record and ticks several other boxes with regards to the ideal policyholder. By searching, comparing, and doing what you can to decrease your liability, you can keep those insurance costs to a minimum and save hundreds of dollars a year.