Insurance companies sell car insurance to those drivers who appear to be good risks. A good risk is someone with an established driving record, no traffic tickets, and no accidents. However, if you are a new driver, have a recent history of more than one traffic ticket, accidents in which you were at fault or have been convicted of reckless driving or driving while under the influence (DUI), you are considered high risk. Some car insurance companies will simply cancel your policy or refuse to insure you as too risky to insure. Since all states require that you have car insurance if you drive a car, what do you do if your policy is cancelled? How do you find and keep insurance? What are your choices?
Because each state requires either car insurance of proof of financial responsibility, your state is also likely to help high risk drivers get car insurance. Some states have laws that require that each insurer doing business in their state to accept a certain percentage of high risk drivers for car insurance coverage (usually only covering liability.) These high-risk driver insurers will cover high risk drivers in insurance “pools” (groups) called assigned-risk, also referred to as the shared or residual insurance market. Normally, insurers usually look at all drivers and factor in the number of claims/costs/etc. over all those drivers to determine what a reasonable insurance premium would be (plus a certain amount of profit.) By separately insuring high risk drivers from the rest of the drivers they insure, the insurance companies carve out the costs and risks of high risk drivers and keep premiums lower for drivers with good driving records. But for high risk drivers, that means they will bear the costs associated with their driving habits (more accidents, claims, personal injuries caused in those accidents.)
But there are still ways for high risk drivers to save money today and down the road.
- Shop around – The best way to make find affordable car insurance is to shop around. Even in the high risk driver category, you can find competitive rates.
- What are you driving? Think about the type of car you own. If you have a sports car or a car with four wheel drive, these are cars that typically cost more to insure than most 4-door sedans. If your car insurance is so expensive you have difficulty affording it, then maybe it’s time to find a less expensive to insure car.
- Work on your driving record – If you have multiple moving violations, it may take a couple of years (depending on the state) for those moving violations to drop off you driving record. By avoiding new tickets, you are clearing the slate so that you can eventually qualify for car insurance rate reflecting your improved driving habits.
- If you are not a high risk driver yet, try to stay out of that category. If your state offers traffic school, it may help remove a moving violation from your record.