Steps get cover when insurers classify you as a high-risk driver
Insurance providers are risk management specialists. When a car insurance provider sets your premiums, they’re largely based on what kind of risk level the insurer perceives you to be. Factors insurers consider can include driver age, driving history and vehicle.
If you’ve had a suspended license or have a history of traffic infringements, you might be lumped into an extra-high-risk category, raising your premiums even higher on top of the normal risk factors. In addition, your risk factor might be further compounded by the type of car you’re driving. Altogether, these and other risk factors make a substantial difference to your premiums.
What makes someone a high-risk driver?
Generally, different insurers will have their own driver categories. Some might have three different tiers (low, medium and high risk) while others might take a more nuanced approach with additional categories and the consideration of more factors.
Your category will affect your premiums, and your category is generally determined by a combination of risk factors, which can both raise and lower your premiums by different amounts. It can be a good idea to get a solid understanding of the factors affecting car insurance premiums, so you can easily pick out ways to reduce your costs. Some of the following factors can bump your risk level up:
- Being a learner driver or on P plates
- Having a history of speeding, DUIs or other violations
- Spending a lot more time on the road than other customers
- Having a high-powered car
- Having made a lot of car insurance claims in the past
If you’ve been lumped into a high-risk car insurance category, there’s no magic bullet for more cover at lower cost. It’s worth comparing cover from a range of providers and if necessary, speaking with a specialist car insurance provider.
Do I have to let my insurer know if my license has been suspended?
Yes. The terms of most policies stipulate that you need to tell your insurer about anything that raises your risk level unless you can reasonably expect the provider to know about it already.
- If your insurer does know about it, then informing them probably won’t affect your premiums.
- If your insurer doesn’t know about it, then not telling them may be used to deny a claim later on.
It’s generally a good idea to let your insurer know about it.
How to reduce the risk and cut your costs
The following are some of the major steps you can take to reduce premiums:
- Keep an eye out for discounts. Some brands offer discounts as high as 25% just for taking out cover online.
- A different policy. You can choose a third party property damage only policy or a third party policy with fire and theft cover. This means giving up the benefits of comprehensive car insurance, but it can greatly reduce the cost of a policy.
- Drive less. You might start taking public transport and get rides whenever you can, so you don’t drive unless you really need to. There are pay as you go car insurance policies which let you nominate a kilometre limit per policy period, which can give you reduced premiums for staying within it. If you need to go over your kilometre limit, you can top up your policy on a case by case basis.
- Choose a higher excess. This has a major effect on your premiums. You might choose an unpleasantly high excess and then save your car insurance for the really important claims, like liability costs or a total loss.
- Park off the street. A lot of car insurance claims come from someone damaging your car overnight. Some insurers may offer lower prices to people who park cars off the street, preferably under cover or inside a lockable garage.
- Remove any modifications. These add to the overall value of a car and to your premiums.
You can also find multiple ways to stack smaller discounts on top of each other.
- Nominate a driver. Depending on the policy, you might be able to reduce costs by specifically nominating yourself as the only driver.
- Pay premiums annually. If possible, it often costs less overall to pay premiums in annual instalments rather than doing it monthly or fortnightly.
- Use security devices. A lot of insurers will extend discounts to you if your car has certain security devices.
- Use market value. It’s usually cheaper to insure a car at market value instead of agreed value.
- Look for a multi-policy discount. If you have other forms of cover with one provider, you are often able to get a multi-policy discount, to the tune of 5-10%, by taking out car insurance with the same insurer.
- Complete a defensive driving course. Even if you don’t need it, having a driving certificate can mean lower premiums with some insurers. Generally, courses need to be approved by the insurer.
- Buy online. Significant discounts may be available for signing up online.