Car Insurance for High-risk Drivers

by Ronel Forbes

January 27, 2022

In many countries, a driver’s risk profile is one of the most important variables in determining the cost of auto insurance. Risk-based insurance is still in its infancy in the Philippines.

Some automobile insurance companies are incorporating technology such as telematics, artificial intelligence (AI), and the Internet of Things (IoT) to provide better and, more crucially, fair car insurance rates. Let’s learn more about high-risk driver auto insurance and prepare for a future where risk-based insurance will be the norm.

What does a high-risk driver imply?

A high-risk driver is a car owner who makes numerous claims on his or her insurance policy. Both the automobile owner and the insurance company suffer as a result of this. Simply put, if you are a high-risk driver who files numerous claims, your vehicle insurance’s loss ratio rises, meaning the expenses sustained by the insurance company for your claim exceed the amount of your premium.

Factors that contribute to you being a high-risk driver

There are sophisticated gadgets that can determine a driver’s risk profile. However, not all Philippine vehicle insurance companies have adopted this technology into their pricing models. The following parameters are used by these insurers to price a high-risk vehicle insurance policy.

Age

Some insurance firms charge young drivers, or car owners under the age of 30, a higher auto insurance premium. One reason for the high price could be because most young automobile drivers have less driving expertise than older drivers.

Experienced drivers, on the other hand, may have to pay a lower premium than youthful drivers. Some insurance companies assume that experienced drivers are more likely to drive safely and file fewer claims.

Location

The likelihood of car theft and accidents is loosely tied to the location of residence or where the automobile will spend most of the time. When examining a given region, some sites may be more vulnerable to theft than others.

History of a claim

Frequent claims can raise the cost of your automobile insurance since you will lose a valuable reduction known as the No Claim Bonus (NCB). Because this is linked to claims, you may have to pay a higher premium when your auto insurance is renewed.

Marital status

According to a study conducted in the United States of America, a married person’s vehicle insurance rate lowers by 5%. The idea behind the premium differential between married and single people is that a married person is more financially stable and a safer driver.

What are the drawbacks of driving a high-risk vehicle?

The following are the drawbacks of being a high-risk driver.

One of the most serious consequences of being a high-risk driver is the increased likelihood of an accident. Overspeeding or disobeying traffic restrictions are common characteristics of a dangerous driver.
This is quite risky. It endangers the lives of not just the driver and passengers, but also those on the road. On the road, there could be pedestrians, other vehicles, hawkers, and so on.
A higher vehicle insurance rate is another downside of being a high-risk driver. Based on the variables listed above, the insurance provider will assess your risk profile and price your auto insurance policy appropriately.
Because the odds of raising claims are higher for a high-risk driver, the NCB will regularly reset. This results in higher premiums for high-risk drivers, which is a negative.

To become a low-risk driver, take these steps.

Follow traffic standards such as stopping at a red light, carrying valid identification, and driving at the speed indicated by the road signs.
Driving slowly at first and then maintaining a constant speed is a good way to learn how to manage your speed.
When you choose a voluntary deductible for auto insurance, you agree to pay a portion of the claim at the time of damage, which lowers your premium.
Maintaining vigilance while driving will assist you to avoid hitting any obstacles. Only if you are aware when driving will you be able to handle the car in time.
Maintain a safe distance from other drivers at all times. If other drivers apply emergency brakes and come to a sudden stop, you can take action.
When turning, keep your speed down because a vehicle arriving from the other side may be totally in your blind area. If you make a sharp turn at high speed, you may collide with this car and cause an accident.
While driving, maintain proper posture. When driving for an extended period of time, this will assist you in maintaining a comfortable position. Uncomfortable posture can cause bodily aches and make it difficult to concentrate.
Wear your seatbelt and stay in your seat during a collision to ensure your safety. If you don’t fasten your seatbelt, you risk colliding with the windshield and suffering serious injuries.
Take care not to participate in illicit racing or other criminal activities. As a result, your claim will be denied, and you will be classified as a high-risk driver.
Consider taking a refresher driving course to help you understand the fundamentals of driving a car.

Drivers who pose a high risk vs. those who pose a low risk

Low-risk drivers, on the other hand, are individuals who are less likely to get into difficulty on the road. They may have a clean driving record and a solid credit history, work nearby, or reside in a rural location.

These final two indicators indicate that a driver may be on the road less frequently or encounter fewer vehicles on the road, both of which may lessen the likelihood of an accident.