A lot of different drivers are on the road. Do you know how your insurance company classifies you as a driver? Drivers are categorized into three groups. Preferred risk drivers, standard risk drivers, and high-risk drivers are the typical levels of driver risk. Understanding the different driver risk classifications will empower you to improve your status if possible.
Preferred Risk Driver
Preferred drivers have a lot of positive characteristics insurance companies love. Preferred drivers get the best rates and usually have low claim activity. Being a preferred driver puts you in control because if you do not like your current insurance carrier, it will be easy to shop and find a different insurance carrier with possibly better rates.
Characteristics of a preferred risk driver:
- Age 25 or older
- Clean driving record
- Minimal not-at-fault claims
- Good insurance credit score
- Prior to six months of insurance with liability limits of 100/300 or higher
Most of the preferred driver characteristics are self-explanatory. However, it may surprise you to see your prior liability limits factor into your driving status. Insurance companies prefer clients to carry liability limits of 100/300 or higher because it is the best protection against lawsuits. Opting for your state’s minimal liability coverage usually reflects poorly on you as a driving risk.
Standard Risk Driver
Being a standard risk driver puts you right in the middle of the best and worst drivers. Most insurance companies will write a policy for you and you have room to improve your rate. A standard risk driver might only have one area to work on to get to the preferred risk driver status. Knowing what is holding you back from a preferred rate, is the first step in correcting the problem.
Characteristics of a standard risk driver:
- One or two minor traffic violations
- No more than one at-fault accident
- Average insurance credit score
- Prior to six months of insurance
If you are a standard risk driver, it is still possible to get a reasonable insurance rate, especially if you excel in one area of the characteristics. For example, a standard risk driver with one traffic violation can still get an excellent rate if they have perfect credit. Or, if a standard risk driver’s credit isn’t the best, a clean driving record can save the day. It’s a combination of nicks on your record that put you into an undesirable price point.
High Risk Driver
The dreaded high-risk driver classification is never ideal. Rates can be impossibly high, particularly if you have financed a vehicle and are required to carry full coverage. High-risk drivers are more likely to have accidents and file multiple claims. Because of the high cost of insurance for a high-risk driver, high-risk drivers often let their insurance policy lapse, putting them in an endless cycle of high rates.
Characteristics of a high-risk driver:
- Major traffic violation
- Combination of at-fault accidents and tickets
- No prior insurance
- Terrible insurance credit score
A low credit score does not exclude you from a preferred or standard insurance carrier, however, the rate increase for a low insurance credit score can be so high it is included as a characteristic of the high-risk tier. The lower your credit the higher your risk and rate, but not every company uses credit as a factor in determining your risk. Your credit rating is included because it is becoming so common among insurance carriers.
Changes in your driving status can happen at any time. Knowing what affects your insurance risk will help put you in control of your insurance rate. Focus on your driving record and credit score while maintaining continuous coverage at all times to get you to the preferred driver risk level.