Guide to High-Risk Auto Insurance

High-Risk Auto Insurance

Are you grappling to find an auto insurance policy? Are carriers quoting you rates that are unreasonably above the local average or turning you down altogether? If that’s the case, car insurance providers may have labeled you as a high-risk driver—you have a greater-than-average likelihood of getting in an accident; hence, you’re more expensive to insure.

Naturally, the high-risk driver classification is often as a result of your own actions—and it results in tougher restrictions, higher premiums, and limited options. You’ll have trouble finding cheaper car insurance rates, but that shouldn’t bring your driving world to an end. You can still apply for coverage through some of the nation’s top high-risk car insurance companies and eventually be removed from this classification.

What is High-Risk Auto Insurance?

High-risk auto insurance is a type of car insured designed to cover situations in which the insurance company perceives there’s a higher chance of you making a claim or when the perceived claim payout is higher than average.

Your driving record will largely determine whether you need high-risk auto insurance. For instance, a conviction for driving under the influence (DUI) or multiple traffic infractions will see you classified as a high-risk driver—and this fact clearly reflects in your insurance premiums.

What is a High-Risk Driver?

A high-risk driver isn’t eligible for standard auto insurance through a preferred insurance provider because he/she’s more likely to cause an accident. Insurers may classify you as a high-risk driver using the following criteria:

  • An accident on your driving record. An at-fault accident on your driving record will lead insurance providers to assume that you’re at a higher chance of getting involved in an accident in future. Even the slightest fender-bender will increase your coverage rates, more so if there are multiple traffic tickets or violations on your driving record.
  • DUI or DWI. It’s incredibly dangerous to drive under the influence of drugs or alcohol. In Canada, driving while impaired by drugs or with an illegal blood alcohol level of 0.08 or more remains the most notable factor contributing to fatal road accidents. A single instance of intoxication will classify you as a high-risk driver outright.
  • Gaps in coverage or no prior insurance. Most insurance companies will treat a gap in insurance coverage as a red flag. Drivers who’ve just purchased their coverage are also considered high-risk. You must remain continuously insured for a minimum of six months to close the gap/
  • A teen driver. If you’ve just entered the fray, don’t be shocked if your car insurance rates are through the roof. Statistically, teenagers are more likely to get into a car accident, hence are considered high-risk.
  • A poor credit score. You’d assume that your credit score has nothing to do with your driving record, but they’re mutual. Your credit score is an important factor in calculating your insurance premiums and—more often than not—you’re considered a high-risk driver if your score is really poor.

You don’t want to fall in any of these classifications because outrageous premiums are just as hefty as being denied coverage altogether.

How Does Being a High-Risk Driver Affect Your Coverage?

Sometimes it may be beyond your control—you’re a teen driver who just obtained their license—but you won’t get away with being a high-risk driver. What does this mean in terms of coverage?

First, auto insurance coverage will be hard to come by. Insurance companies often work toward minimizing their exposure risk and claim payouts—so they’ll easily deny you coverage if you fall in their high-risk driver classifications.

You can also expect to pay higher-than-normal premiums if your insurance provider deems you a high-risk driver. Since there’s a higher chance that you’ll make a claim, insurance companies will charge a higher premium to mitigate the risks—you could pay up to 25% more compared with the average driver.

Shopping and comparing quotes will give you a better shot at securing reasonable coverage. Your preferred carriers may deny you coverage, so you’ll want to consider companies that specialize in high-risk auto insurance policies.

What to Look for in a Company and Policy

The high-risk driver tag shouldn’t necessarily condemn you to a life of low-quality auto insurance if you know what to look for. Here’s what we recommend you look for in a company and policy:

  • Complaints. Your driving record may not portray the best of driving habits—but insurance companies lowball you for the same. High, out of the ordinary complaints against an insurance provider indicate a high level of unsatisfied customers—you obviously deserve better.
  • Affordable rates. You’ll naturally pay more for car insurance as a high-risk driver compared with a driver who’s considered less risky—but that shouldn’t put you off from seeking affordable rates. You may lower the cost of your premiums by bundling policies or negotiating better terms with your provider. It doesn’t hurt to ask for a reprieve.
  • Discounts. High-risk drivers may also qualify for insurance discounts. You’ll want to consider insurance companies that give discounts to drivers who take defensive driving courses, remain claims-free for a certain period, or show improvements in their driving record.
  • Clear pricing structure. If you’re classified as a high-risk driver for filing a claim for a minor traffic accident, you shouldn’t be doomed to pay the same premium as a driver with a major DUI conviction. Look for an insurance carrier that clearly outlines the fees and premium calculations.
  • Getting rid of the high-risk tag. While there are laws that dictate how long driving penalties, traffic violations, and claims stay on your driving record, some high-risk insurers will help you lower your risk profile and move out of this category.

How to Save on High-Risk Car Insurance

A high-risk auto insurance policy costs more than your standard policy, but this doesn’t eliminate the possibility of saving on insurance—it’s just more difficult. Luckily, here are a few approaches we recommend you take to lower your high-risk car insurance premiums.

  • Compare insurance quotes. The easiest way to save on car insurance is to compare quotes from multiple providers. Insurance companies won’t offer similar policies—it’s upon you to do your homework and get the most reasonable rates. Online insurance calculators may give you an estimate of what you can expect to pay.
  • Explore policy discounts. Insurance companies won’t look you out of policy discounts because of your unattractive driving record. In an effort to lower your risk profile, insurance carriers will give insurance discounts for enrolling in a safe driver program or completing a defensive driving course. You may also score discounts for bundling policies or installing anti-theft devices in your car.
  • Drive responsibly. Responsible driving will help you save on high-risk auto insurance. For instance, you’ll enjoy a lower premium if you go for three years without a ticket on your record.
  • Improve your credit score. Insurance companies often associate high-risk drivers with poor credit scores—getting yours back on track will give you a different outlook in the eyes of your insurer. With a good credit score, your insurance provider may shave some costs of your premium, not forgetting you’re better poised to negotiate better terms on your policy.
  • Own an insurance-friendly vehicle. Driving a sports car may require high-risk insurance—some insurers consider them higher risk vehicles. You could trade it in for one that your insurance company is happy to insure at a lower rate.
  • Obtain insurance through associations. Sometimes, insurance companies will offer more lenient insurance rates if you’re affiliated with a certain group.

Remember to pay attention to the factors that affect your insurability, and continually make improvements wherever possible—you’ll land favourable premiums sooner.

Frequently Asked Questions

How Much Does High-Risk Insurance Cost?

Generally, a high-risk auto insurance policy will cost 25% more compared with a standard auto insurance policy. However, this could be more depending on your overall driving record and why your insurance provider classifies you as a high-risk driver. For instance, a DUI or DWI conviction reported to your insurer could cause a 50% to 150% rise in your insurance premium or your coverage may be suspended.

The average Ontario driver pays $1,920 per year for car insurance. Two traffic violations within the last three years in your driving record—your premiums will soar to $2,700 per year. This isn’t cheap.

How Long Are You Considered a High-Risk Driver?

Insurance companies don’t follow the same rules regarding how long they consider you a high-risk driver, but you can expect anything from 6 months to about 6 years depending on how far back an insurance company digs into your driving record. The reason you were designated as a risky driver in the first place will also impact how long you drag this tag along.

Minor traffic violations like speeding tickets will stay on your driving record for three years. Major violations like a DUI conviction or an at-fault accident could take up to 6 years to fall off your record. New drivers who’ve never had insurance are considered high-risk only for the first 6 months of their policy.

Take the time to analyze your insurance company’s point system—sometimes referred to as a surcharge schedule—to understand how accumulating points will impact your rates and how long you’re considered a high-risk driver.

What if I Can’t Find Car Insurance?

An insurance company may lock you out of its policies because of your driving record, but you shouldn’t stop trying. If you can’t find car insurance, the first step is to reach out to another provider—different insurers have different qualification parameters. And if you’re denied by several insurers, you may need to explore these options:

  • A carrier that specializes in high-risk drivers. Insurers who specialize in high-risk auto insurance will write non-standard policies for drivers with bad accident records, sports cars or who live in risky neighborhoods. They may also provide more comprehensive coverage than your preferred carrier.
  • Work on lowering your risk profile. You don’t want to be classified as a high-risk driver forever. You can quickly change your status by improving your driving abilities and avoiding traffic violations.
  • You may have to wait. You don’t want to hear this, but it may be your last resort—wait for the points you’ve accumulated from driving violations and traffic tickets to fall off your record or become too old for an insurer to dig into. After this, your insurer will no longer consider you high-risk—giving a fresh start to your car insurance hunt.