Get low rates even with a bad driving record.
Car insurance has a habit of being a pesky double-edged sword: the more you use it, the more you pay for it. Regardless of why you file a claim, frequent payouts or lots of driving violations all equate to being a risky (or, in this case, "bad") driver and customer to your insurance company. And as we all know, if an insurance company sees you as a risky customer, they will cushion their exposure by charging you a higher premium. Still, just because you have a bad driving record or history of filing claim doesn't mean you have to drive uninsured. Let's explore your options.
Speeding, reckless driving, or racing can seriously impact your premium. While the amount varies based on how much you were speeding, getting ticketed can increase your premium an average of $297 annually. This figure skyrockets if you’re caught driving recklessly (a $997 increase) as well as racing — which can increase your premium over a thousand bucks. Plus, you should consider that your insurance company will continue to increase your rates for driving and ticket violations for 3 years.
From an insurance perspective, DUIs are the big ones. On average, a DUI can raise your rate by 80% annually. However, in states like North Carolina and Hawaii, your premium can increase as high as 350% and 200%, respectively.
Regardless if you were at fault, filing a claim with an insurance company can cause your premium to spike for two reasons. The first, and the most obvious, your insurance company lost revenue by paying out the claim — regardless how small. Two, and less obvious, insurance companies see the likelihood of you filing another claim to increase after your first. Again, insurance companies will cushion this predicted risk by increasing your premium.
National Average Annual Auto Insurance Premiums by Driving Violations
|Accident/Violation||Avg Annual Premium||Increase in Premium|
|Speeding 6 - 10 MPH Over Limit||$1,593||$270|
|Speeding in School Zone||$1,601||$279|
|Speeding 11 - 15 MPH Over Limit||$1,604||$282|
|Speeding 16 - 20 MPH Over Limit||$1,628||$305|
|Speeding 21 - 25 MPH Over Limit||$1,653||$331|
|In 65 MPH Zone||$1,710||$388|
Yes, obviously: the key to having a good driving record is to be a safe driver. But we had to include it. Abide the speed limit, take an Uber or Lyft if you’ve been drinking, and put your phone down. It’s not worth paying more for car insurance or potentially getting into an accident.
Sometimes, it makes financial sense not to file a claim or involve your insurance company. For example, you rear end someone and the estimates for the repairs are $600, consider if it is worth filing a claim or just paying for the repairs yourself. Just like with tickets, you will be rated on this accident for 3 years (typically). In the US, an at-fault accident can raise your insurance premium an average of $612 per year. Over three years, that’s over $1,836 in increases alone. If paying that $600 is feasible for you, it makes financial sense to bite the bullet and pay it upfront rather than being hurt with an increased insurance premium.
For some insurance companies, the risk of a guaranteed claim payout on their end is too high to insure. Still, state governments recognize that the legal requirement of car insurance puts these risky drivers on the verge of driving without insurance. So, each state goes through their DMV and groups risky drivers together in a pool and assigns a certain number of these individuals to insurance companies — otherwise known as Assigned Risk Insurance. Insurance companies are required to insure these drivers, although they will usually charge quite high for them and have different conditions for them as well. In order to be considered in this “pool,” you have to apply and prove you have no other option for car insurance — i.e., you keep getting denied coverage.
The difference between an assigned risk pool program and a non-standard company is basically the involvement in your government. Non-standard companies are not assigned any clients but they still specialize in high-risk drivers.
Again, this is pretty obvious but it is still worth noting. In most states and for most violations, you will be rated (charged) for 3 years. So, by maintaining insurance either with a standard or non-standard company for 3 years, you can expect your insurance rate to drop if you don’t have any further violations or claims.
Even if you’re not being rated for a claim or ticket, shopping around for car insurance every policy cycle is a great way to ensure you’re getting the best rate. Use our insurance calculator here.
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Editor’s Note: This piece was written for Quoted by Nick Clements, Co-Founder of MagnifyMoney.com, a price comparison website that helps...