What is high-risk car insurance?
High-risk car insurance is a term for insurance policies offered to drivers considered to be ‘high risk’. Drivers in this category typically pay a higher premium due to factors such as poor driving history (e.g., frequent traffic violations or multiple claims), limited driving experience, or driving a modified or high-performance vehicle.
Who’s considered a high-risk driver in Australia?
Insurers use several measures to determine the level of risk you might pose as a driver, often using data like population statistics as well as your own behaviour on the road. Some of the most common factors that go into determining your car insurance premium include:
- Age
- Gender
- Driving history and experience
- Claims history
- How often you drive your car
The age of the driver
Drivers under the age of 25 pay the most on average in comprehensive car insurance premiums, according to Canstar Research. This is mainly due to the perceived risks associated with insuring younger, more inexperienced drivers. In turn, older, more experienced drivers can usually expect lower premiums than younger motorists.
The gender of the driver
When it comes to gender, younger men are generally considered riskier than younger women.
Driving history and experience
Your driving habits, including your driving history and your level of experience behind the wheel, can impact how expensive your policy is likely to be. If you have a history of speeding or other traffic violations, you’ll likely be perceived as higher risk than a driver who has a clean driving record with no traffic offences.
Additionally, anyone who has less experience driving on the roads will likely be seen as a higher risk, whether they’re a 16-year-old learner driver or a 50-year-old first-time driver.
Claims history
Insurers will also typically look at what claims you’ve made with them or previous car insurers when determining your premium.
When it comes to the impact a previous claim can have on the cost of your insurance, deciding factors will be whether you were at fault, and how much that claim cost the insurer.
Making a claim on your car insurance can also reduce or remove any no-claims discount (or no-claims bonus) available under your policy. If this discount is reduced or lost, your premium may increase when it's time to renew your cover.
How often you drive your car
If you spend long hours on the road, particularly during rush hour, or use your car more than the average person, you may find you have higher premiums. Statistically speaking, the more time you spend on the road, the more likely you are to make a claim.
Can a high-risk driver get car insurance in Australia?
Even if you’re considered high-risk, you can still usually get coverage for your car. While a ‘high-risk car insurance’ policy isn’t generally offered as a product by providers, you’ll likely be offered a regular policy with higher associated premiums or more restrictive terms.
You must take reasonable care to answer your insurer's questions about your driving history and previous claims honestly and accurately. Failing to do so could see any claims you make reduced or refused, potentially leaving you with significant out of pocket costs.
Do high-risk drivers pay more for car insurance?
The cost of your car insurance premium depends largely on the level of risk the insurer perceives you pose, and the likelihood of you filing a claim in the future. Since high-risk drivers pose a higher risk for the insurer, they’ll usually pay more for a car insurance policy.
How much is car insurance for high-risk drivers?
How much you end up paying in car insurance premiums will depend on personal details like your age, gender, and driving history. For example, according to Canstar data, the average annual premium for a man under 25 is $3,158, compared to $2,833 for a woman of the same age. By comparison, drivers aged 50 and over pay an average of $1,451 per year. Family policies, which often cover a mix of experienced and less experienced drivers, are also more expensive on average, costing approximately $3,133 per year.
What else goes into determining your premium?
The risk level of the driver is just one factor that determines a person’s car insurance premium. Other factors can include the type of car insurance cover and excess chosen, where and how the car is stored during the day and at night, the make and model of vehicle being insured and any after-market modifications made to it. It can also include the intended use of the car (e.g., for personal or business use).
What restrictions may be placed on high-risk car insurance?
Drivers considered high-risk may face certain restrictions when it comes to taking out a car insurance policy. These limitations can vary depending on the insurer, but some general restrictions are:
- Limited policy options: While some insurers may not cover you at all, others may only offer you certain types of optional car insurance like third party property damage or third party fire and theft, rather than comprehensive cover.
- Higher premiums and excess: Insurers will usually charge high-risk drivers higher premiums, but they may also include higher standard excesses on their policies.
- Additional exclusions: All policies have a list of general exclusions/situations in which they won’t provide cover, like when a policyholder is driving under the influence of drugs/alcohol or overloading their vehicle. High-risk drivers may find that the policies they’re offered come with additional exclusions which limit the types of incidents or damage that they’re covered for.
How long will you be considered high-risk by your insurer?
This will vary depending on your personal circumstances. To assess your risk, insurers will typically evaluate your driving record for a period of time (e.g., 12 months). And, if you've shown you're a responsible driver in that period, the insurer may lower your risk classification and offer you a reduced premium.
How to find the best car insurance for high-risk drivers in Australia
While some factors that could put you into the high-risk category are out of your control, such as your age and gender, here are some tips that may help you save money on your car insurance:
Look out for discounts
Some providers offer deals and discounts for taking out a new policy online or having multiple policies with the same provider. They may also offer no-claim bonuses or discounts to customers who go for long periods without making a claim, even those who may have been considered a high-risk driver when they first took out their policy.
Familiarise yourself with the options out there and don’t be afraid to contact a provider to negotiate a discounted rate for switching or remaining loyal.
Consider your coverage
As a driver in Australia, you’re only legally required to hold Compulsory Third Party (CTP) insurance, which is designed to cover you for compensation claims if you were to hurt or fatally injure another person in a car accident. CTP insurance is also referred to as Green Slip insurance in NSW and Motor Accident Injuries (MAI) insurance in the ACT. Aside from that, it’s up to you to choose the level of optional cover you would like.
Third party property damage insurance is the cheapest form of optional car insurance and provides coverage for damage you cause to other people’s vehicles and property. Third party fire and theft insurance provides the same coverage as third party property damage while also protecting your vehicle if it’s damaged by fire or stolen by thieves.
Comprehensive car insurance is generally the most expensive form of optional cover, but covers your vehicle in the largest number of situations. It provides the same coverage as third party fire and theft, while also covering your own vehicle for accidental damage, flooding, hail and storm damage, and theft.
When comparing policies, consider not only the price, but also what is and isn't covered, along with any optional features that may be available. It’s important to read all the relevant documentation, like the Product Disclosure Statement (PDS), for any policy you’re considering.
Drive safely
Safe drivers are generally involved in fewer road-related accidents than those who constantly break road rules. Practising safe driving habits, such as controlling your speed, avoiding distractions, and obeying road rules, can help you maintain a clean driving record. This can often help to improve your risk profile, as well as build up a no-claims bonus or discount (if one applies to your policy).
Park your car securely
If possible, park your car in a secure location, such as a lockable garage or secure parking area at home or work. This may help reduce the risk of theft, vandalism, and weather-related damage, which could make you a lower-risk customer in the eyes of some insurers and potentially lead to a lower premium. You could also consider buying a car fitted with safety and security devices to reduce the risk of theft and damage.
Leave your car at home
If you’re looking to lower your premiums, consider leaving your car at home and catching public transport. Some providers may offer discounted low-kilometre policies to customers who drive less than a certain kilometre threshold each year.
Additionally, there are ‘pay-as-you-drive’ policies that allow you to nominate a kilometre limit for a policy period (typically a year) and offer reduced premiums for not going over your agreed limit. If you need to go over your nominated limit, you may be able to top up your policy’s limit at a cost.
Consider a higher excess
The excess is the amount you agree to pay in the event of an insurance claim in addition to your premium. The remaining costs (up to certain limits outlined in your policy) will then be paid by the insurer.
If, at the time you take out your policy, you opt to pay a higher excess, then your provider will typically offer you a lower premium. But you’ll need to take into consideration what that would mean for you financially if you did get into an accident, and whether you’d be able to pay out this higher excess amount.
Can I add a high-risk driver to my existing insurance policy?
This will depend on your insurer, and it’ll usually need additional information about the driver and their driving history before making a decision. If it’s willing to add the high-risk driver, then you can usually expect to pay higher premiums and/or excesses as a result.
Can I get car insurance with a suspended licence?
While you may still be able to get car insurance if your licence is suspended, some providers require a valid driver’s licence to provide coverage.
If you already have car insurance and your licence becomes suspended, your policy may have exclusions that affect your cover. It’s important to inform your insurer if your licence becomes suspended. Not being truthful with your insurer can often lead to claims being denied and your coverage being voided.
Some insurers may be willing to reduce your level of coverage while you’re unable to drive the vehicle, while others may refuse to renew your policy when it expires. It’s also important to note that your claims will likely be refused if you were to be involved in an accident while driving on a suspended licence.
