High-risk insurance is a type of insurance policy offered to drivers that do not qualify and cannot get average car insurance. Driving a car can be vital to a person or company, mainly if your business depends on driving to clients, getting to meetings or delivering products or services to customers’ homes.
Whilst driving a car safely is essential, you should not be hindered due to personal factors outside of your control, like age, or due to lapses in judgement that have since then been improved on. High-risk insurance is a blessing for those considered ‘high risk’, even if it is generally more expensive than standard car insurance.
Types of People High-Risk Insurance Would Affect
The leading cause for concern for insurance companies is age on both sides of the spectrum. Insurance companies believe that their driving is more reckless for younger drivers, and there is a higher risk of car accidents occurring when they are behind the wheel.
Suppose a person is believed to have a higher risk of getting into a car accident. In that case, the monthly premium becomes more expensive because there is a likelier chance of the company paying out more money and more frequently. Delving in more specifically, teenage men have the highest car insurance rates because statistics show that they drive more often, with more expensive cars and more dangerously.
How is Cost Affected?
The average cost of monthly car insurance per person is £851 for 20-year-olds, whilst it can be over £100 cheaper for 25-year-olds.
As the age increases, the premium decreases (up until 60 years of age).
Similarly, elders are also considered high-risk drivers and may have to apply to this type of insurance. The average cost of insurance for a 65-year-old is £491 monthly, whilst for 75-year-olds is almost over half as much, a dramatic increase. Older adults are more likely to suffer from delayed reactions, visual impediments like cataracts, weaker hearing, or bodily impairments like arthritis.
Adding to this, an accident that would barely harm a younger driver could be detrimental to an elder. Medical costs would be more expensive for the insurance company to pay out. A culmination of all of these factors is why older people should apply for high-risk insurance instead.
Does Experience Influence Cost?
Inexperienced drivers like first-time drivers may not always be young, but they still pose a high risk to insurance companies. This is because a lack of driving history shows a little-to-no testament to your capabilities. As a result, there is no evidence to the insurers that you are a good driver, automatically labelling you as high risk. Moreover, a lack of experience is a disadvantage over those who have driven for longer as your road sign, traffic, speed, and parking skills have not yet developed.
Drivers with bad driving history are perceptibly more high risk than those with clear records, as they have previously shown reckless behaviour, and companies will note this when they decide on your quote. If you have had car insurance before, they can see how many claims you have had and what for. So, for instance, if you have crashed many times within the past few years and your old insurance company has paid out a lot of money for car repair or medical bills, this will influence the quote you are currently applying for based on your past behaviour.
Multiple violations class a driver as high risk. For example, if you are caught drinking driving, the drink driving endorsement (DR10) can stay remain on your record, and the offence can be held on it for 11 years; however, after five years, it no longer has to be stated to your insurance company.
You will not be able to drive for the first year after the offence, but after this may consider applying for insurance again to start driving. Other offences like speeding, damage to property or injuring other people also count as a violation and will deter you from applying for average car insurance, which is why these transgressions will force you to apply for high-risk insurance instead. The more points you have had taken off of your licence, or the more times you have had your license revoked, the more likely you are to pay a higher premium or be rejected altogether.
Poor credit can severely affect your premium price. Drivers with a low credit score are statically proven to be more dangerous drivers and file more claims, consequently making them more high risk for companies to insure. A low credit score is anything under 580. It can be caused by applying for excessive credit cards, being consistently late with paying bills, having many loans, or not having a long enough credit card history. Generally, a low credit score implies bad judgement and unreliability.
Lastly, one more important factor to note is occupation type. For employees that drive frequently and over long distances, for instance, over the average 7600 miles annually, the insurance is often a lot more expensive. This includes professions like drivers, chefs and hairdressers, with the highest quotes respectively. This is because they frequently drive to different locations like venues or their clients’ houses and spend a lot of time in their car driving at peak hours which is when most traffic-related accidents occur.
All in all, driving is crucial in many businesses, especially those that require employees to travel from place to place for work purposes. Hence, if you do not fit the specific requirements of regular car insurance, you may have to apply for high-risk insurance instead to insure yourself with your car. Although high-risk insurance is more expensive, there are various ways to lower it.
Some of these methods include:
- using a cheaper model of a car,
- driving less in terms of mileage,
- using a ‘black box’ so that the insurance company can record your driving and lower your premium based on your performance,
- or even take a driving course to show the insurance company that your driving is of a good standard.
Find out more about the importance of insurance here.
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