How a High-Risk Driver Affects Your Auto Insurance

Your auto insurance premium is unique to you and is largely based on how likely you are to use it. A high-risk driver is one who is more likely to file a claim. To determine your riskiness, your auto insurance company uses a complex algorithm that weighs in a variety of factors.

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4 Factors That Make You a High-Risk Driver

Your Age

Young drivers typically pay more for auto insurance than seasoned drivers who have decades of driving experience under their belts. The reason for that is simple: inexperienced drivers are less likely to accurately assess risks and make the right spur-of-the-moment judgment calls, which results in a greater likelihood of them ending up in an accident. Even if you are a careful driver that has never been in an accident, as a young driver, your age bracket will automatically result in a higher premium.

Your Living Arrangements

There is a reason that some auto insurance companies provide homeowner discounts. In the eyes of your auto insurance company, owning a home is associated with stability and low-risk behavior. While not all auto insurance companies give better rates to homeowners versus renters, if you have recently bought a home, your auto insurance agent may be able to help you score a better rate on car insurance.

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Your Financial History

When evaluating a policyholder’s “riskiness,” auto insurance companies typically run a “soft” credit check. In fact, the National Association of Insurance Commissioners reports that about 95% of auto insurance companies use credit-based insurance scores in states where it’s legal for them to do so, including Nevada. That’s because many studies and risk assessors have shown that a person’s financial history is a strong indicator of how many claims they will file in the future. It’s important to note that your credit-based insurance score isn’t the same thing as your credit score that’s used by lenders. While each auto insurance company uses its own unique algorithm for generating this score, the score typically includes your payment history, outstanding debt, credit history length, the types of credit you have and whether you’ve recently applied for a loan or credit card.

Your Driving History

Perhaps the most significant thing that puts you in the “risky” category is your driving history, particularly how many traffic violations are on your record and how many at-fault accidents you’ve been in. Because past behavior is a strong indicator of future behavior, at least as far as your auto insurance company is concerned, you’ll pay a higher premium if you’ve filed multiple claims in the past or have otherwise demonstrated that you’re a risk-taker behind the wheel.

How to Get Rid of High-Risk Driver Status

Fortunately, if you are in the “high risk” category, there are steps you can take to lower your auto insurance rate. In some cases, you just have to wait until things like traffic tickets drop off your driving record or until you have more driving experience. Other times, taking defensive driving courses may have a positive impact on your premium.  Overall increasing your credit score and also paying your bills regularly and on time can help.

Related Articles:

Does My Driving Record Affect My Auto Insurance Rate?

Clean Your Driving Record to Save on Auto Insurance

Do Auto Insurance Companies Do A Credit Check?

How a Speeding Ticket Can Affect Your Auto Insurance Rate

Read More: Auto Insurance in Las Vegas, Nevada

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DISCLAIMER: It is important to note that the information contained herein is made general for the purpose of explanation.  You should consult your policy for exclusions or other language that may alter your policy.

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