High-Risk Car Insurance: How It Works
Learn what high-risk car insurance is, who it's for, and how to lower your premiums with our expert guide.
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If an insurance company labels you a high-risk driver, it believes you’re more likely to be involved in an incident leading to an insurance claim. Unfortunately, this classification often results in higher car insurance premiums and fewer coverage options, even from the best car insurance companies.
However, being labelled a high-risk driver doesn’t mean you’re out of options. There are still ways to navigate the insurance landscape and secure the best possible rates.
In this guide, we explain everything you need to know about high-risk car insurance, including how to improve your standing and find coverage that works for you.
Key takeaways
- High-risk car insurance is a specialised type of auto insurance designed for drivers with a high statistical likelihood of filing claims.
- Drivers can be labelled high-risk for various reasons, including a history of accidents, frequent claims, young age and inexperience, low credit score, or even driving a high-performance or luxury vehicle.
- High-risk drivers face higher insurance premiums, but there are ways to reduce costs, such as taking advanced driving courses, choosing a lower insurance group car, paying a higher excess, and shopping around for better rates.
What is high risk car insurance?
High-risk car insurance is a type of auto insurance designed for drivers who are more likely to file claims. Insurance companies assess this increased risk using various criteria, such as driving history, age, and vehicle type.
Who is high risk car insurance for?
High-risk car insurance is for motorists who insurers deem more likely to be involved in covered incidents or file claims. The classification can apply to many motorists, from those with a history of traffic violations to the young and inexperienced.
How do I know if I am considered high risk?
Each insurance company has its own criteria for determining who qualifies as a high-risk driver. However, several common factors could place you in this category, including:
- History of accidents and traffic violations: Insurers will consider you a high liability if you’ve been involved in multiple accidents or received many points for traffic violations (such as speeding tickets, drink-driving penalties, or reckless driving citations). These incidents suggest a pattern of unsafe driving behavior, which raises concerns for insurers. As a result, drivers with such a history may need to seek specialised coverage options, like high points insurance, to meet their insurance needs.
- Frequent claims: Insurers may view you as a higher risk if you’ve filed several claims in a short period—even if the accidents weren’t your fault.
- Young age and limited experience: If you only recently received your license and are under 25, most insurers consider you a high risk due to your lack of experience on the road.
- Poor credit score: Some insurers factor in your credit score when determining risk. A low credit score may signal financial instability, which insurers sometimes associate with a higher likelihood of missing future payments.
- License revocation: If you’ve ever had your driving license revoked for any reason, this will likely place you in the high-risk group. It often signals problematic driving behaviour or legal issues.
- Non-driving convictions: In some cases, having a conviction for a crime unrelated to driving (such as theft or fraud) can also lead to a ‘high-risk’ classification.
- Insurance coverage lapses: Some insurers may view gaps in auto insurance coverage as a sign of financial instability, making them more hesitant to offer you standard coverage.
Can my car put me in the ‘high-risk’ category?
Yes, these vehicles are often considered high-risk:
- High-performance or sports cars: Vehicles with powerful engines, such as sports cars or muscle cars, are often associated with aggressive driving and higher speeds. Insurers view these cars as more likely to be involved in accidents, which can result in higher premiums.
- Luxury vehicles: These come with high repair or replacement costs. Insurers may consider you a more significant financial risk if you drive a high-end car, especially if parts are expensive or difficult to source.
- Cars with high theft rates: Some models are more attractive to thieves due to their popularity or resale value. Insurers will likely classify drivers of frequently targeted cars as high-risk.
- Modified or customised vehicles: Significant vehicle modifications—such as engine upgrades, suspension changes, or custom paint jobs—can raise risk profile. Some of these changes affect the vehicle’s safety and performance, making it more susceptible to accidents or costly repairs. Others can increase the car's value, raising the potential for a larger claim.
- Classic or rare models: Older cars or rare models may lack modern safety features, making them riskier to insure. Finding replacement parts for these vehicles can also be challenging and expensive, further increasing risk profile.
Insurance options for high-risk drivers
Several types of car insurance are available to high-risk drivers. These include:
Specialised high-risk insurance
Some insurance companies specialise in covering high-risk drivers. These high-risk insurers understand this category of drivers’ unique challenges, so they often offer more flexible terms and competitive rates.
Pay-as-you go insurance
Pay-as-you-go (or usage-based) insurance policies use telematics devices to track driving habits, such as mileage, speed, and braking. Responsible driving could lower premiums.
Young driver insurance
As we saw earlier, young or inexperienced drivers often face high premiums because they lack a driving history. Some insurers offer specialised policies for young drivers, which may include features like telematics to monitor driving behaviour.
Temporary or short-term insurance
Temporary policies provide coverage for a limited period, such as a few days or months. They can be useful for high-risk drivers who need coverage only for a short time, such as when renting a car or during a transitional period.
How high-risk status affects your car insurance premiums
A high-risk status can affect your car insurance premiums in several ways.
- Higher base premiums: High-risk drivers typically pay much more in insurance premiums than low-risk drivers.
- Limited discounts: Many standard car insurance providers offer discounts or promotional offers for regular drivers. However, high-risk drivers may have limited access to these discounts, and some insurers exclude them entirely from these offers.
- Higher excess amounts: To compensate for the increased risk, insurers may require high-risk drivers to pay a higher mandatory excess. This means these drivers must pay more out of pocket before insurance coverage kicks in after an accident or claim.
Tips to lower high-risk car insurance premiums
While being labelled a high-risk driver often means higher premiums, there are still ways to reduce insurance costs.
Improve your record
A way to lower your premiums is to demonstrate safer driving habits over time. Avoid traffic violations, accidents, and DUIs, as these are major red flags for insurers. A clean driving record can gradually improve your risk profile and lead to lower rates.
Take an advanced driving course
Enrolling in an approved advanced driving course could help you secure lower premiums. These courses teach valuable safety skills and show insurers that you’re committed to becoming a safer driver.
Shop around for quotes
Not all insurers treat high-risk drivers the same. Some specialise in high-risk coverage and could offer more competitive rates. Use online comparison platforms like Review Centre to get quotes from numerous providers and find the best deal for your situation.
Increase your excess amount
A higher excess can bring down your monthly premiums. However, ensure you can afford the excess if you ever have to file a claim. This strategy works best for drivers confident in their ability to avoid accidents.
Improve your credit score
Increasing your credit score can help lower premiums. To boost your score, pay down debt, make payments on time, and check your credit report for errors.
Bundle your policies
If you have other coverage needs, like home insurance, bundle them with your car insurance. Even if you’re a high-risk driver, some insurers might offer you a discount if you purchase other insurance products from them.
Consider black box insurance
Black box insurance involves installing a device in your car that monitors your driving habits and sends the data back to your insurer. If you show responsible driving habits, the insurer may lower your premiums.
Get a vehicle in a lower insurance group
Exchanging your current vehicle for another one with high safety ratings, low repair costs, and advanced safety features can help lower your premiums. Avoid high-performance or luxury vehicles, which are often more expensive to insure.
Reassess your policy annually
Your risk profile can change over time, so it's a good idea to review your policy each year. You may qualify for lower rates if your driving record has improved or circumstances have changed.
FAQs
How soon can I get out of the ‘high-risk’ car insurance category?
It depends on the reason you were classified as high-risk and your driving behaviour going forward. For example, high-risk classifications due to driving violations or accidents often improve as incidents age off your record. This can take anywhere from 3-7 years. Meanwhile, owning a high-risk vehicle (e.g., a sports car) can be resolved by switching to a safer, more standard model. Additionally, consistent safe driving can help reduce your risk status over time.
Can my profession affect high-risk car insurance?
Yes, certain professions—such as delivery drivers, truck drivers, or those who frequently use their vehicles for work—may be classified as high-risk due to the increased time spent on the road.
Do high-risk car insurance policies cover the same as standard policies?
It depends on the provider and policy, but generally, high-risk drivers may find that their coverage options are more restrictive.
For example, some insurers may only offer liability coverage (the minimum required by law) to high-risk drivers, excluding comprehensive or collision coverage. Others may exclude certain benefits such as courtesy car or multi car breakdown cover discounts.
That said, it’s possible to find a high-risk policy with the same coverage as a standard one, but you’ll likely have to pay a much higher premium.