How Do Car Insurance Companies Define A "High Risk Driver"?

In the complex world of car insurance, understanding what constitutes a high-risk driver is crucial. This comprehensive guide delves into the factors that lead insurance companies to label a driver as high-risk and offers insights into how this affects your insurance rates. Whether you're navigating the roads of Texas or elsewhere, this article aims to provide clarity and actionable advice.

What Defines a High-Risk Driver?

Insurance companies often categorize drivers as 'high-risk' based on various factors, including driving history, age, type of vehicle, and even credit scores. A history of traffic violations, accidents, or DUIs typically flags a driver as high-risk. Young drivers or those with high-performance vehicles are also often placed in this category due to their perceived risk.

Impact on Insurance Premiums

Being tagged as a high-risk driver can really bump up your car insurance rates. Insurers assess these drivers as having a higher likelihood of filing claims, leading to increased rates. Understanding these factors is essential, especially in states like Texas, where insurance costs can vary widely. Learn more about the average cost of car insurance in Texas.

Improving Your Driving Record

The good news is that being high-risk isn't a permanent status. Drivers can take steps to improve their record, such as attending defensive driving courses or maintaining a clean driving record over time. Additionally, understanding factors like aggressive driving, a significant contributor to accidents, can help in making informed decisions.

Insurance Options for High-Risk Drivers

Finding affordable insurance as a high-risk driver can be challenging, but it's not impossible. Some insurers specialize in high-risk coverage, offering tailored policies that consider individual circumstances. It's also worth exploring different rate structures, like those offered by LOOP, which focus on fair and transparent pricing.

How Long Are You Considered A High Risk Driver?

You can still find auto insurance even if you’re high risk. To find coverage, shop around and compare rates from multiple insurers.

If you have any negative marks on your driving history, you’ll have to wait until they drop off your driving record before you lose the “high risk” label.  Most violations (i.e. moving violations, traffic violations, etc.) can stay on your driving record for about three to five years.

Reasons Why You May Be Labeled A High-Risk Driver

There are a number of factors insurers use when deciding if you’re a high risk driver. Many of them have to do with the way you drive.

Driving Without Insurance

Having a lapse in car insurance coverage or getting caught driving on the road without car insurance can negatively affect your driving history. Lapsed insurance can also affect your car insurance prices when you start shopping for a new policy.

At-Fault Accidents

If you’ve been the cause of multiple accidents over the past few years, it’s likely you’ll be labeled as a high-risk driver. Having these on your record may indicate to insurers that you’re likely to get in an accident in the future. Even if a majority of these accidents don’t have you marked down as the at-fault driver, a large number of accidents is a concern for insurance underwriters

Moving Violations

If you don’t follow the traffic signals and get caught, you’ll be charged with a moving violation. This includes actions like running a red light, failing to yield, or driving through a stop sign. When you’re convicted of a moving violation, your driver’s license will be assigned points.

The more serious the violation, the more points will be added. If you accumulate too many points, your license will become suspended.

DUI Offense

Driving under the influence is a serious offense and can cause your license to be suspended and you to be labeled a high-risk driver. Most insurers will immediately raise your car insurance rates after a DUI conviction. You also risk seriously injuring yourself and other people, and getting arrested.

The best way to avoid becoming a high-risk driver is to make sure you’re following the rules of the road. This means never driving under the influence (this goes beyond just alcohol consumption), removing distractions while driving, and obeying all traffic laws.

Reckless Driving

If you have a past of irresponsible driving that’s resulted in tickets, at-fault accidents, or criminal charges, you’ll likely be considered high risk.

If you’re wondering, “how many points is reckless driving on my record?”, one thing to keep in mind is that the points vary depending on the state you’re in (it’s 2 points in Texas).

Reckless driving is a broad term, but it basically means driving in a way that threatens those around you. When insurance companies see this on your record, it shows a disregard for the safety of other drivers.

Examples include:

• Not following stop signs or traffic lights
• Not signaling before making a turn or changing lanes
• Extreme speeding (by how much varies by state, usually driving 10 miles above the speed limit)
• Swerving into oncoming traffic
• Driving into areas not meant for cars
• Making dangerous maneuvers like weaving or tailgating

Aggressive Driving

Aggressive driving is a form of reckless driving, fueled by frustration or anger (see more about road rage below), with the intent to harass or scare other drivers. Not only can it get you pulled over (i.e. speeding tickets) and charged with a misdemeanor, it can also get you killed.

Aggressive driving is one of the leading causes of car accidents on the highway.

Road Rage

Ever been running late for an appointment and hit a traffic jam?

Experiencing stress while driving is normal, but letting it turn into full-blown road rage can be dangerous (to both other drivers and your driving record). Road rage and reckless driving typically go hand in hand.

Road rage is a combination of anger and frustration that can affect your driving skills and judgment. Road rage typically takes the form of yelling, honking, and lots of angry hand gestures, but if these actions get worse you can find yourself in a bad situation.

Why You May Be Labeled A High-Risk Driver Regardless Of How Well You Drive

Even if you’re the safest driver, you can still get labeled as high-risk due to your age, lapses in coverage, or for having a poor credit score. Note that these factors have nothing to do with whether or not you’re safely driving from one destination to another.

Being Young

Young, inexperienced drivers are considered a higher risk to insure than an older driver who has been on the road for longer. Why? Young drivers generally have higher accident rates than adults.

‍“Newdrivers have less experience behind the wheel. In most cases, this means they are seen as a high risk driver by car insurance companies,” explainsour Head of Underwriting Jonathan Seibold.

Lapses in Coverage

If you own a car but drive without car insurance, even for a short period of time, you may be considered a high-risk driver. Many states require drivers to have a minimum amount of car insurance, and going without coverage can indicate you may be financially irresponsible.

Having poor credit

To most insurance companies, drivers with poor credit scores are considered a higher risk. Studies show that credit score can raise your insurance premiums by 50-70% in some cases, depending on the insurance carrier rating you and the state you live in.

Some people may take their credit for granted, but the ability to get access to credit is a privilege many Americans don’t have. Using credit scores to determine car insurance prices is discriminatory and disproportionally affects lower-income individuals and communities of color.

At LOOP, we believe all drivers are worthy of access to fair rates. We’re committed to never using credit scores to price or underwrite our community. Instead, we use more dynamic measures of risk to create more inclusive pricing for our customers.

The main takeaway

Navigating the road as a high-risk driver can be challenging, but with the right knowledge and approach, it's possible to find affordable insurance and work towards improving your driving profile. Stay informed, drive responsibly, and continually reassess your insurance needs to make sure you're getting the best possible rates.

Additional Resources

• Car Insurance Calculator
• Understanding Texas Car Insurance Requirements
• Video Resource: Insurance Insights
• Who Gets the Best Rates in Insurance

This article was originally published on 12/13/2022 and was recently updated as of 01/30/2022.

About the Author: This article was crafted by the LOOP Marketing Team. Comprising of seasoned professionals with expertise in the insurance industry, our team is dedicated to providing readers with accurate, up-to-date, and valuable information. At LOOP, we're passionate about helping families navigate the world of car insurance, ensuring they get the best coverage at the most affordable rates. Learn more about our mission and values here.

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