High Risk Auto Insurance: How Much Will It Hurt Your Wallet?

Car insurance is something you need before you get behind the wheel and a good driving record can translate to lower premiums. If your driving record is spotty, or your have poor credit, however, you may only qualify for high risk auto insurance. That can drive up the expense of getting covered.

But just how expensive is high risk auto insurance? Here’s what you need to know about paying for high risk coverage — and what you can do to cut your premium costs.

High Risk Auto Insurance: How Much Will It Hurt Your Wallet?
High Risk Auto Insurance: How Much Will It Hurt Your Wallet?

Who’s a High Risk Driver?

Different insurers may have different criteria for determining who falls into the high risk category. Generally, though, you might be assigned high risk status if:

  • You’ve been convicted of driving under the influence (DUI)
  • You’re a young or first-time driver
  • You’ve allowed your existing car insurance policy to lapse
  • You have accidents or other driving violations (like speeding or reckless driving) on your record
  • You have a poor credit rating

That last one’s important to note because it may not seem like your credit score would have an impact but it does. If your credit report shows a history of late or missed payments, or other irresponsible financial behavior, your insurer may view you as more of a risk.

Adding Up the Cost of High Risk Auto Insurance

There’s no standard fee for high risk car insurance. Instead, your premiums are based on where you live, your age, driving record and credit rating.

In Maine, for example, the average annual premium cost for a high risk policy is $584, according to ValuePenguin. In Michigan, however, the average high risk driver pays $2,766 per year for auto insurance.

Across the board, high risk auto premiums rise for drivers with speeding tickets, DUIs and accidents on their record. Young drivers face the highest premiums for high risk coverage, ranging from $900 in Hawaii to $11,271 in Michigan.

Qualifying for a Standard Auto Insurance Policy

If you’ve been deemed high risk, there are some things you can do to become eligible for a standard policy. A standard rating would likely carry lower premiums.

Focus on cleaning up your driving record. You may be able to erase points against your license by taking a defensive driving course, for example. In the meantime, remember to obey all traffic laws and keep your license, registration and insurance up to date so you don’t run the risk of landing a ticket.

The other piece of the puzzle is your credit. Check your free credit score with Credit Sesame to see where you stand. If your credit’s not that great, consider using a card like the Barclaycard Arrival Plus™ World Elite MasterCard® to bring it up. This card allows you to earn 2X miles on every purchase and you can establish a positive payment history when you pay on time each month.

As your credit improves, remember to shop around for the best deal on auto insurance. Compare rates for standard policies to see which insurer is the most budget-friendly.

( Photo by free pictures of money )

4 Responses to High Risk Auto Insurance: How Much Will It Hurt Your Wallet?

  1. You left one other condition that effects cost and places you in high risk insurance— geographic location where you reside and will be parking car. You could have a perfect driver record and still pay a high cost. What gets me about this is the reasoning behind this by insurance companies that because of the large number of uninsured motorist in area, those who actually pay for insurance have to bear the cost to cover for those who don’t who cause the biggest effect on payouts from accidents.
    Doesn’t this sound familiar, very similar to the reasoning behind how cost of healthcare insurance are determined based on geographic location.
    The only way around this high cost is to maintain a good driver record and after a certain period of time, both premiums and deductibles will come down and don’t cancel the insurance and keep coverage active. Another way they get you even in a passive accident ( car parked and hit by a hit and run ) is that any and all claims effect cost of insurance.

  2. That’s a good catch Maria Rose. In reading the article, it made me think that if your insurance is too high, you might be better off to park your car and cancel your insurance, and take Uber! At least until three years pass, and the violations/accidents fall off your record. Other than that, you might have to consider moving to a different state. No easy options here!!! And yes, just like health insurance.

  3. Going without insurance is not an option because if you have a gap, for whatever reason, the next time you get car insurance, you’ll be automatically enrolled as a high risk driver despite a good driver record. I had times that I didn’t have a car but continued policy by lowering coverage to just liability to keep insurance active which made it easier to add a new car and get a lower rate when I needed full coverage. The trick is to have more time with insurance with no claims. And if you get renters insurance together with the car insurance, there’s additional discounts.
    Uber or a cab service is not cheap by me. ( $10 to go 2 miles one way). I eventually gave up driving a car and took public transportation. But that’s not an option if where you live isn’t an urban setting. My opinion for car insurance is that cost should not equal a car payment and one should utilize every discount to lower premiums, ( alarms, safety features, non-smoker, etc.) especially when you don’t want to take a higher deductible. Some insurers will not only lower premiums but also lower deductibles the longer you go without any claims. The only claims that don’t effect cost is glass coverage which also helps lower total cost..
    I am making these observations as someone who moving to a lower cost area is not a valid option because all that does is effect travel time and cost of maintenance to keep car running. I am not a fan of a 90 minute travel on a slow day going one way. Some people enjoy long drives which are nice if you don’t have heavy traffic to deal with but in my area, there’s traffic and tolls to deal with., plus road conditions..
    Trick is to budget for a higher cost at first and drive safe. Also take a defensive driving class which helps lower premiums.

  4. According to AAA, it costs about $9,000 per year to keep the average car, including car insurance. It’s one of the stealth expenses we don’t think about. A car is a major expense, so it’s important to manage it properly. Like maybe having an older car with no payment if your insurance premiums are high. But all that you’ve said is good advice Maria.

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