Auto insurance companies assign different levels of risk to motorists depending on their driving histories and personal circumstances. You should do your best not to be labeled a high-risk driver. Otherwise, you may have to contend with the following consequences.
High Auto Insurance Costs
First and foremost, a bad driving history is likely to make your insurance rates rise. This makes sense because insurance companies use your past driving history to predict your future risk. The more you incur driving offenses, the higher your rates may hike. Therefore, maintaining a good driving history is one of the best things you can do to enjoy low auto insurance rates.
SR-22 Insurance Requirement
If your driving history is particularly bad, then you may be required to carry SR-22 insurance. This is not auto insurance coverage in the traditional meaning of insurance. Rather, it is a certificate of financial responsibility that proves to the authorities that you meet the minimum insurance coverage requirements. You may be required to carry SR-22 insurance if you are convicted of a DUI, charged with driving without coverage, or accused of causing a serious accident. It follows, therefore, that you will pay more for your coverage if you need SR-22 coverage.
Limit on Who Can Drive Your Car
Another dangerous thing with being a high-risk driver is that your insurance carrier may place limits on who can drive your car. This makes sense because if you are already a high-risk driver, your insurance carrier may not wish to see your risk rise further by letting other high-risk drivers operate your car. For example, inexperienced drivers such as your teenage children may be excluded from your high-risk auto insurance coverage.
Smaller Insurance Payouts
If you are driving with a high-risk auto insurance coverage, then you may be entitled to smaller payouts than those who are classified as low-risk drivers are entitled to. For example, some forms of high-risk auto insurance coverage take into account the depreciation of repairs when settling claims. That definitely reduces the effective claim payout for high-risk drivers.
No Coverage for Punitive Damages
Lastly, high-risk auto insurance coverage may not include all the risks covered by conventional auto insurance coverage. For example, your auto insurance coverage would normally come to your rescue if another motorist sues you for auto accident damages and gets awarded punitive damages. However, this may not be the case if you have high-risk auto insurance because of limited coverage.
For more information, contact a company such as Kesner Insurance Agency Inc.
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