Why do high risk drivers pay higher rates for auto insurance?

Why do high risk drivers pay higher rates for auto insurance?

There seems to be a lot of interest in high risk insurance online. Type high risk auto insurance in any search engine and you will find hundreds of websites offering to sell you insurance even though you are in the high risk category. How nice of them, you may think, but that does not help you to understand what high-risk means, in the field of auto insurance. Neither does it explain how being classified as such can affect your premium rates.

You would be classified as a high risk driver when applying to buy auto insurance if you are new to driving, as in the case of teenagers or people newly licensed. If you have been charged with more than one traffic rule violations, such as a DUI/DWI, have a terrible credit rating and bad payment history, or have a lot of prior claims, chances are you will be have to buy high risk auto insurance. Being categorized as a high risk prospect can easily hike the rates you would have to pay for auto insurance. Your driving history, including any violations, can even result in an increase in premium payments for a policy you already have.

The logic behind it, from the standpoint of the auto insurance company is common sense enough. A person who is a bad driver is much more likely to get in an accident, and damage the car or become liable for damage to another person or their property. This in turn would automatically lead to the filing of an insurance claim. Also, research shows that a person with a bad payment history, where loans are concerned, is much more likely to file an insurance claim rather than someone with a good credit rating and history.

In cases of high risk auto insurance, the auto insurance company is at a greater risk of expense in order to pay the claim. This is the reason why they charge you a higher premium, to cover their own risk. You can, however, make a difference in your auto insurance premium rates by doing a little research and some comparative shopping. If there are a few spots on your driving record, if your credit history is not as clean as you would like, shop around a little and compare quotes from multiple auto insurance companies. There are companies which are quite profitable and can afford to give you a better rate, and some even specifically target high risk owners and drivers.

The non-standard auto insurance market has a whole section that concentrates on high risk auto insurance for those with a history of traffic offenses or prior claims, as well as new drivers, people with bad and so on, at lower rates than their competition. It will take time and work to reduce your high risk auto insurance premium, so concentrate on a better driving and credit record. In the short term, a basic auto insurance policy combined with a better driving record can save you some money while you work on getting off the high-risk list.