Understanding High-Risk Car Insurance
High-risk car insurance is an auto insurance plan for a high-risk driver. High-risk drivers include those who have DUIs (also known as impaired charges in Canada), multiple traffic violations or minor convictions (speeding, failing to stop at stop signs), or have been at fault in several car accidents. The most common reasons are CNPs (cancellation for non-payment).
These minor incidents, such as CNPs or minor convictions, can add up and catch drivers by surprise when they’re suddenly considered high-risk. For these reasons, high-risk drivers may have a more challenging time finding insurance. Most insurance companies might not want to risk insuring someone who is prone to not following traffic laws.
Who Needs High-Risk Insurance?
As outlined above, certain driving incidents may require a driver to obtain high-risk car insurance. Some insurance providers will alert you regarding your policy and whether they can continue to cover you as a high-risk driver. Here are some common scenarios that may lead to needing high-risk insurance:
- Drivers Who Violate Traffic Laws: This includes drivers who frequently exceed speed limits, ignore traffic signals, or engage in aggressive driving behaviours like tailgating.
- Drivers with Distracted or Impaired Driving Charges: Drivers charged with using a mobile phone while driving or being otherwise distracted, as well as those convicted of driving under the influence of alcohol or drugs, may be classified as high-risk.
- Drivers with a Poor Driving Record: A history of multiple traffic tickets, license suspensions, or serious accidents can result in high-risk insurance classification due to a demonstrated pattern of unsafe driving.
How Does High-Risk Car Insurance Work?
High-risk car insurance is determined based on criteria similar to standard insurance. Policy providers evaluate premiums, deductibles, and other coverage by examining the vehicle, its usage, and the drivers themselves. However, coverage always comes at a higher cost due to the increased risk of insuring the driver (since they are more likely to make a claim). Thus, premiums and deductibles can be twice or three times the price of standard insurance.
The Vehicle
Details regarding what type of car a driver uses affect the insurance rates. These factors include the year the vehicle was manufactured and the make and model (some cars are more valuable than others, thus more expensive to insure).
Driver’s Information
The driver’s history and age are critical in determining insurance rates, especially for high-risk drivers:
- A younger, more inexperienced driver will likely have higher premium rates.
- A more experienced driver with years of experience may have lower rates.
- The driver’s home residence also matters as specific postal codes can be connected to areas with higher accident rates.
- Suppose the driver does a payment delinquency when the driver doesn’t pay their insurance on time. If this occurs more than once within three years, the driver may become high-risk.
Driving Habits
The driver’s general usage patterns play a significant role in determining insurance rates. For example, insurers may ask if the car is driven daily or for business purposes. The rates could differ if the vehicle is only used leisurely on weekends.
Insurance Actuaries
Insurance companies examine the above information and conduct risk assessments effectively with the help of actuaries. Actuaries are trained professionals who assess risk and determine insurance rates by analyzing data received by the driver and predicting future claims. Insurance companies use this data to determine premiums and deductibles for high-risk drivers.
High-Risk Insurance in Ontario
There are several factors related to being a high-risk driver in Ontario. You might be curious how insurance companies can determine this status and, if determined, how long drivers are deemed high-risk. Let’s take a closer look:
License Suspension
If a driver’s license has ever been suspended, it will show on their driving record. Insurance companies obtain a copy of this when evaluating whether to insure drivers. Insurers can also see information regarding past residential addresses and license plate renewals.
Driving Record
Depending on the insurance company’s policy, some may examine driving records for three to ten years. Review timelines may also vary depending on the information the insurer is seeking. For example, some may look back three years for speeding tickets but up to six to ten years for accidents. Accidents that aren’t the driver’s fault do not impact their driving record.
Duration of a High-Risk Driver
Following a recent accident or traffic violation, a driver will be considered high-risk for approximately six years.
Insurance Costs
High-risk insurance in Ontario can be double or triple what standard insurance might cost with the same provider. If you live in a more traffic-dense neighbourhood or car accidents are more common in your city, that also makes a difference.
How to Lower Your High-Risk Status
Being labelled as a high-risk driver is something nobody wants to have happen, especially if driving is an essential part of their daily lives. There are a few things drivers can do to lower high-risk status, such as:
- Maintaining a clean driving record by avoiding any traffic violations or accidents.
- Wait for the traffic violations and license suspensions to expire from your record, which may take approximately three years.
- Modify policy coverages or pay plans.
Increase Insurance Deductibles
By being willing to pay more out of your own pocket when filing a claim, you can help lower your insurance rates. This demonstrates to insurance companies you are willing to take on more financial responsibility should you be involved in an accident.
Another option is to pay for additional coverage. While your record is “clean,” you can buy the accident and minor conviction protection waivers. Both waivers prevent your rates from increasing in the event of your first at-fault accident and minor ticket.
Annual Premiums
Many insurance companies offer monthly pay plans that last for the year. This method may cost more because insurance companies charge financing fees. That’s why an annual plan can help save on financing fees, as those generally apply to monthly payments. If you have the means to pay annually, you can prevent any billing issues for the remainder of the contract, which includes CNPs. That will help remove one of the reasons that drivers reach high-risk status in the first place. By switching to an annual one, you demonstrate your commitment to paying your insurance on time and doing what you can to reduce your risk as a driver.
Helping High-risk Drivers Find Insurers
Our team at Rowat Insurance understands the need to find an insurance policy that suits your needs. Whether you are a high-risk driver or not, we can help you find a policy that covers all the necessary bases. We can also bundle car and home insurance to help further reduce your premiums and potentially your deductible.
Let’s work together to get you the insurance that matches your lifestyle. Contact us today to learn more.