Car insurance companies calculate rates for their policyholders based on each driver's risk rating. To insurers, this rating implies the likelihood the policyholder will be involved in an at-fault accident. They are required to pay costs associated with injuries or property damage caused by their customers (up to the coverage limit), and adjust their rates accordingly. Drivers who are considered "high-risk" are forced to pay higher car insurance rates.It's important to emphasize the term "high risk" means different things to each insurer. One company may consider you a lower risk than another company based on the same criteria, and therefore will offer you lower rates.
One of the most important factors affecting your insurance rate is your past driving history. If your driving record shows a few demerit points, you will not be automatically categorized as a high-risk driver. Much depends on the reasons for which you received the points. For example, a few tickets received for failing to signal is generally considered less important than a single 6-point ticket for racing.
There are many other factors that influence your rating. For example, motorists whose policies are cancelled for non-payment or late payment are also affected. These factors weigh less than your driving record, but will still have an effect on your rating.
How to improve your risk rating
Making the transition from a high-risk category to a lower-risk one requires time and diligence. You'll need to drive safely (of course), and avoid receiving demerit points and tickets. You'll also need to pay your premiums in a timely manner to avoid cancellation. Depending on your driving record, improving your rating might take years. This is because your auto insurance company will want to ensure your future choices behind the wheel will not reflect those made in the past.
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How to Find Affordable Car Insurance
