Car insurance for high-risk drivers: What to consider

Do risky drivers pay higher insurance premiums?

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. The riskier you are as a driver, the more likely you are to be in an accident and file a claim, so the costlier you could be to insure. This means that yes, drivers who are perceived as risky may well end up paying higher car insurance premiums.

What makes someone a high-risk driver?

Insurers use a variety of measures to determine the level of risk that you might pose, often drawing on a range of generalised data such as population statistics as well as your own behaviour. 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 more risky than younger women. For older drivers though, older men are typically considered less risky than older women. Insurers likely have different ages in mind when determining when one gender becomes more or less risky to insure than the other.

Driving history and experience

Your driving habits, including your driving history and your level of experience behind the wheel, can have an effect on how expensive your policy is likely to be.

If you have a history of speeding or other traffic violations, you will likely be perceived as more of a risk for the insurer to cover and as such could face higher premiums 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 to insurers, whether they are a 16 year old learner driver or 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 how much of an impact a previous claim can have on the cost of your car insurance, the main deciding factors will be whether you’ve been deemed to be at-fault or not-at-fault for the claim, and how much that claim has cost the insurer.

Making any claims on your car insurance will also usually mean you will lose some or all of your no-claims discount/bonus if it’s available under your policy. Without the discount being taken from your premium, the cost of your car insurance will increase.

How often you drive your car

If you spend long hours on the road, 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 have an accident.

How long will you be considered high-risk by your insurer?

This will vary depending on your circumstances, where you live and your driving history. To assess your risk, insurers will typically evaluate your driving record for a period of time. And, if you have shown to be a responsible driver in that period, the insurer may lower the risk classification, and in turn offer more affordable insurance options.

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 also taken into consideration can include the type of car insurance cover and excess chosen, the location of where 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).

Can a high-risk driver get cover?

Even if you’re considered high-risk, you can still usually get insurance cover for your car. While a ‘high risk car insurance’ policy isn’t generally offered as a product by car insurance providers, you may instead be offered a regular policy with higher associated premiums.

It’s important you disclose all relevant information to your insurer when it comes to your driving history and previous claims, even if these details may negatively impact the cost of your car insurance. Failing to provide this information could void your cover and lead to claims being dismissed.

What restrictions may be placed on high-risk car insurance?

Drivers considered high-risk by insurers may face certain restrictions when it comes to taking out a car insurance policy. These limitations can vary depending on the insurance provider, but some general restrictions are:

• Limited policy options: While some insurance providers may not offer to provide cover at all, others may only offer certain types of optional car insurance to high-risk drivers, such as Third Party Property Damage or Third Party Fire and Theft, rather than comprehensive cover.

• Higher premiums and excess: As mentioned above, some providers may charge higher car insurance premiums to drivers considered high-risk or more likely to make a claim. This may also be the case for the policy’s excess amount, which is the amount you must pay when making a claim.

• Additional exclusions: All car insurance policies have a list of general exclusions in which they won’t provide cover for (e.g. driving under the influence of drugs/alcohol, overloading your vehicle etc.). High-risk drivers may find that the policies they are offered come with additional exclusions which limit the types of incidents or damage that they are covered for.

How to find the best car insurance for high risk drivers in Australia?

While there are some factors that could put you into the high-risk category for car insurance that 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 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 of time 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 the provider to negotiate a discounted rate for switching or remaining loyal.

Consider your coverage

As a driver in Australia, you are 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 with your car 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 is damaged by fire or stolen by thieves.

Comprehensive car insurance is, as the name would suggest, the most comprehensive form of optional car insurance and provides the same coverage as Third Party Fire and Theft, while also providing coverage for your own vehicle if it’s damaged in an accident. It also normally carries a higher premium than the other types of optional car insurance.

When considering your options, it can be a good idea to take into consideration what these policies do and don’t cover, as well as their price and if they offer optional features. It’s important to read all the relevant documentation, such as the Product Disclosure Statement (PDS) and Target Market Determination (TMD), for any policy you are considering.

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Drive safely

Safe drivers are generally involved in less road-related accidents than those who constantly break the 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 considered by insurers, as well as build up a no-claims discount/bonus (if one applies).

Park your car securely

Parking securely can reduce your risk of having to make storm and hail, flood or theft and vandalism related claims. Some insurers may offer discounts or lower premiums to drivers that can do this.

Consider finding secure parking at your residence or workplace if possible, and compare the difference it could make to your insurance premiums to see if you could possibly save some money.

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, you could consider leaving your car at home and using other forms of transport where possible. Some insurance providers may offer discounts to customers who don’t regularly use their vehicles.

Additionally, there are pay-as-you-drive insurance 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 during that time. If you need to go over your nominated limit for a particular policy period, you may be able to top up your policy on a case-by-case basis.

Consider a higher excess

The car insurance excess is the amount you agree to pay in the event of an insurance claim. The remaining costs of the claim (up to your agreed sum on your policy) will then be paid by the provider.

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 as a result. But you will need to take into consideration what that would mean for you financially if you did get into an accident, and whether you would be able to pay out the higher excess amount.

Can I add a high-risk driver to my existing insurance policy?

This will ultimately depend on your insurance provider. They may need additional information about the driver’s history before making a decision. If they are 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 in order to provide coverage.

If you already have car insurance and your licence becomes suspended, your policy may have exclusionary clauses that may void your coverage as a result. It’s therefore important to inform your insurance provider if your licence becomes suspended. Not being truthful with your insurer can often lead to claims being denied and your coverage being voided.

Depending on your provider, they may be willing to reduce your level of coverage while you are unable to drive the vehicle, while others may refuse to renew your policy when it expires.

It’s also important to note that your coverage would be voided if you were to be involved in an accident while driving on a suspended licence.

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