How Auto Insurance Companies Determine if You are a “High Risk” Driver

A high risk driver can be defined as a driver whose actions, health, experience, or knowledge makes the driver a risk to themselves or other drivers on the highway. A high risk driver can be categorized as one or a combination of the following:

•    A new driver (this relates to the "experience" and "knowledge" portion of the definition)
•    An individual that commits multiple infractions under state and/or local motor vehicle laws. Infractions include speeding, driving without a seatbelt, etc.
•    An individual that commits infractions under state/federal criminal codes. These infractions include DUI/DWI and reckless driving
•    Drivers with an unusually high number of accidents in a short time. This number varies by state. Three in one year may be excessive in some states while in others, all it takes is two. 
•    Individuals with certain medical conditions that could impair their driving ability

New drivers, specifically teenagers, are considered high risk by all auto insurance companies. This means that more then likely, they will pay much more for auto insurance. Insurance companies classify first time drivers as high risk,  regardless of age. So while first time drivers will almost always pay more for auto insurance that experienced drivers, they will not pay more for auto insurance than teenagers.

Drivers with multiple speeding tickets are a sure red flag for insurance companies. To the auto insurance company, you have a greater chance of being involved in a traffic accident than a driver with no speeding tickets. Your premium will surely reflect this.

Drivers with DUIs/DWIs are immediately placed in the high risk category by insurance companies as well as drivers with multiple accidents, no matter who was at fault. For auto insurance companies, DUIs and accidents mean you are a reckless driver. In these cases, your premiums will be much higher than drivers with clean records OR an auto insurance company may decline coverage altogether.

If you have a certain medical condition that makes it difficult to drive – such as a visual impairment, hearing impairment or other “handicap,” auto insurance companies may place you in the high risk category – even if you have a clean driving record.

There are several other factors that auto insurance companies consider when assessing risk. These include: geographic area, type of car, gender, age, credit (for auto insurance companies poor credit = more claims), and gaps in insurance. If you live in a high crime area or you drive a sports or luxury car, you will pay higher auto insurance premiums.

Auto insurance companies will also consider your marital status and certain bad habits when assessing risk, such as smoking. Currently, middle-aged, non-smoking females represent the lowest risk group for auto insurance companies and single males under 25 represent the highest risk group.

For information about auto insurance and auto insurance laws in your state, visit your state insurance department. Click here to visit the National Association of Insurance Commissioners (NAIC) for a directory of state insurance department websites.