Everything You Need to Know About High Risk Insurance

This post may contain affiliate links. For more details, please view our full disclosure.

Everything You Need to Know About High Risk Insurance

Another reason not to drink and drive, my friends.  As if you needed one.  This post is brought to you and contributed by Abby Locker.

Falling under the high risk insurance category may not be the end of the world, but there are some things you need to know about this type of insurance. What is high risk insurance? How did I fall into the high risk category? How does it effect me directly? How much more will I have to pay? What happens if I don’t have insurance? Do I still have all my driving privileges? What can I do to get out of the high risk label? Here is everything you need to know about high risk insurance.

What is High Risk Insurance?

Insurance companies have multiple categories of insurance each with their own associated fees and regulations. The Preferred Risk, is reserved for drivers with the lowest chance of accident, and as such pay the lowest fees. Most drivers fall under the standard risk category. This category is for drivers who may have had a few accidents or driving violations on their record. The rates for standard risk drivers are a bit higher than the preferred risk rates but not nearly as high as the high risk category. All other fall under high risk. High risk insurance has the highest rates, and in some cases, it can be very hard to procure a policy.

Insurance companies calculate every driver’s risk assessment. That is, how likely are you to get into an accident, or make an insurance claim? Driving records and claim histories are the main factors insurance companies take into account when deciding a potential driver’s risk category.

Driving records and claims are not the only factor used when determining a driver;s insurance risk level.  Age and experience can play a part as well. New drivers and teenagers are typically considered high risk, and fall into the high risk insurance category. Teenage males are involved, statistically speaking, in far more accidents than any other drivers, and fall into the high risk category, paying the highest average rates. While it is illegal for insurance companies to base rates on race or religion, they do use some other interesting factors. Insurance companies use factors like age, gender, marital status, and geographical location to determine rates and categories for each driver.

While these factors all play a role, none of them are as important as the driver’s history and DMV record. There are a few things that will cause a driver to automatically fall into the high risk category. These are as follows: traffic violations such as tickets and/or citations, DUI convictions, driver with bad credit, teenagers, or driver who had previous insurance policies canceled.

Drivers Convicted of DUI are considered high risk drivers. Some insurance companies may choose to cancel a driver’s policy when convicted with DUI. This can make it extremely difficult to get insurance. While there are many companies that specialize in high risk drivers, rates from these types of insurance companies can be a lot higher. If a driver is convicted of DUI, they may be required to carry SR-22 insurance.

SR-22 Insurance

SR-22 insurance is not really a policy, but more of a technical agreement stating that the driver is insured and appropriately covered at all times. Drivers required to carry the SR-22 agreement must carry this with their policy at all times. The insurance company will contact the DMV if a driver’s policy is canceled or suspended, breaking the SR-22 mandate, and the DMV will revoke the car’s registration.

If a driver is found driving while uninsured and/or in breach of SR-22 agreement there may be serious legal consequences including but not limited to: loss of license, fees, car impounded, and in serious or multiple faults, jail time.

There is typically a time frame associated with SR-22. That is, drivers must carry SR-22 insurance for a mandated time, after which they can apply for standard types of insurance policies. Even after the SR-22 mandate has expired the driver may still be considered high risk.

The Cost of High Risk Insurance

The cost of high risk insurance is much greater than any other category. On average, drivers who have had just one moving violation can expect to pay almost 20% more then those with clean records. For many that could mean an increase of about $500-$700 a year. And that is just one violation. High risk drivers can expect to see insurance rates increases, anywhere from around 50% to 60% a year.  That’s a lot of money.

Another cost of high risk insurance is many companies do not offer this type of coverage. Once you have have fallen into the high risk category, many insurance companies may decide to cancel the driver’s policy. This can make it difficult to obtain new a new policy. There’re a ton of resources giving tips on shopping for the best high risk insurance. Doing some research before you signup might save you a ton of money.



4 thoughts on “Everything You Need to Know About High Risk Insurance

  1. Chonce

    I had to get an SR-22 when I was 19 and it was not fun. It was for 3 years and I didn’t like how no one explained to me what it was and how it worked. There should definitely be more articles out there like this one 🙂

    1. femmefrugality

      That stinks, Chonce. I’m glad Abby submitted this, because it’s honestly something I had never heard of before. Could be really important, either before as being a preventative persuasion, or after, because not a lot of people know about it!


Leave a Reply

Your email address will not be published. Required fields are marked *