7 Ways High-Risk Drivers Can Stop Overpaying for Insurance
KEY TAKEAWAYS:
Insurance rates are higher for drivers categorized as high-risk, but there are ways to mitigate that
Being proactive about driving improvement is a good way to start
Shopping around -- for more affordable vehicles and rates -- is equally important
Too many tickets, at-fault accidents or insurance claims can land you in the high-risk driver category, and higher car insurance rates usually follow as insurers price in the added risk.
The difference is significant. According to Insure.com, one speeding ticket raises full coverage premiums from $2,578 to $3,568 a year on average, a 38% jump. A single at-fault accident raises them 60% on average, to $4,129.
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Some insurers won’t offer standard policies at all. “Some insurers may even refuse to offer standard policies to high-risk drivers, leaving them with no choice but to purchase specialized high-risk insurance,” said Seann Malloy, managing partner at Malloy Law Offices. Those policies can cost two to three times more than regular coverage.
The good news is that there are several ways to bring your costs down. Here are seven to try.
1. Identify Why You're High-Risk
It's important to identify why you're being categorized as a high-risk driver so you can avoid that categorization in the future.
Melanie Musson, a car insurance expert with CarInsurance.org, explained that car insurance providers use your driving history as a primary factor when determining if you are high-risk. "Someone with several traffic tickets, a couple of car accidents or a DUI on their record presents an insurance company with a higher risk of having to pay out a claim, so those drivers are classified as high-risk and charged higher premiums," she explained.
Your age may also impact your insurance rates. According to Musson, brand-new drivers don't have the experience to build a record, and they're statistically more likely to be involved in an accident, so young drivers are categorized as high-risk.
If you're not sure why you're being categorized as a high-risk driver, contact your car insurance company for clarification.
2. Take a Driving Safety Course
According to Malloy, many insurance companies offer discounts to high-risk drivers who complete a defensive driving course or a driver improvement course.
"Upon finishing the course, drivers may receive a discount ranging from 5% to 15% on their insurance premiums," he explained. "High-risk drivers can often reduce their insurance rates by participating in these courses, though the specifics depend on the insurer's policies and state regulations."
Malloy highlighted the fact that not all driving courses will qualify for a discount, and insurance companies often accept programs only from specific organizations. Contact your insurance company to ask about whether it offers discounts for courses and which courses qualify for a discount.
3. Look for Car Insurance Discounts
Many car insurance providers offer discounts that can help you save on your insurance costs, even while you're categorized as a high-risk driver.
"Paperless billing usually results in a discount regardless of driving history," Musson explained. "Being a military member will often help drivers get a discount. Bundling home and auto insurance usually results in a discount."
4. Consider a Higher Deductible
Malloy suggested that high-risk drivers consider choosing a higher deductible, which can lower monthly premiums. "For example, increasing your deductible from $500 to $1,000 may reduce your premium," he said.
However, you should consider this option only if you can afford to pay the higher deductible in the event you have to file an insurance claim. If you choose a higher deductible, it's a good idea to set that deductible aside in a savings account so you know you have it ready if you need it.
5. Choose an Affordable Vehicle
The value of your car can also impact your car insurance premiums, so carefully choose the vehicle you drive. "Choose economical models like Toyota Camry, which have lower repair costs and insurance rates," Malloy said.
You might also consider purchasing only liability coverage instead of collision or comprehensive coverage if your car has a low value, such as under $5,000. Just make sure that your policy still meets your state's minimum car insurance requirements.
6. Shop Around for Car Insurance
Shopping around for car insurance may also help you save money as a high-risk driver. "Even though car insurance companies use similar factors when calculating rates, they use different calculations," Musson explained. "So what is a big deal and results in high premiums for one company might not have such an impact with another company."
Take the time to shop around and compare quotes from multiple insurance companies. When you compare the policies, make sure that you not only review the premiums but also consider how the policy types, coverage limitations and exclusions stack up.
7. Focus on Driving Safely
While there are many ways to save on car insurance rates as a high-risk driver, no longer being classified as high-risk is necessary to get those rates to return to normal. According to Malloy, accidents and traffic violations typically fall off your driving record after three to five years, and you'll be able to qualify for lower rates once those violations are no longer on your driving history.
"A bad record doesn't last forever," Musson said. "Start driving carefully, avoid making claims, and within three years, you should see much lower premiums."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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