When determining auto insurance coverage, the insurance company has to consider numerous factors, such as driving history, age, and vehicle type, to determine how much of a risk you might be as a driver. If you’re deemed to be a low risk, you can expect to pay a lower premium for a policy than if you fall into a high-risk category. Here’s a look at the differences between each risk type, so you can determine where you stand and how to improve your ranking.

What Type of Driver Risk Are You?

1. Preferred Risk

Just like it sounds, those in the preferred auto insurance category have the ideal driving characteristics insurance agencies look for. Being labeled this way gives you more power over where you can get auto insurance and the type of premium you pay. 

Generally, preferred drivers are older than 25, have a clean driving record, and minimal not-at-fault claims. They should also have had liability limits of 100/300/50 or higher for at least six months instead of settling for the state’s minimal liability coverage. Most insurance companies also look at the stability of the driver and will factor in whether they’re a homeowner, married, and have a good credit score before assigning preferred status. 

2. Standard Risk

A standard risk driver doesn’t necessarily have a bad record, but they could have one or two factors that are holding them back from becoming a preferred risk. This might be one or two minor traffic violations, one at-fault accident, or an average or low credit score. Usually, standard risk drivers will also have had insurance for at least six months. The good news is that if you only have one area that needs work, you can still get an excellent rate. 

3. High Risk

No one wants to be classified as a high-risk auto insurance driver. It makes rates go up, especially when you require full coverage, and limits where you can actually purchase insurance. These are drivers who’ve had at least one major traffic violation, at-fault accidents, tickets, no record of previous auto insurance, and a bad credit score.

Having a combination of these characteristics will put you in this category, but you don’t have to stay there. Driving records and personal qualifications are always changing. Knowing which areas are negatively affecting your risk rating will help you to take control and work on improving them for better rates in the future.  

When you want a more affordable auto insurance policy, turn to Lafever Insurance Agency in Cookeville, TN. Since 1978, they’ve worked with clients throughout the Upper Cumberland area to get the best rates for their unique circumstances. Visit their website to learn more about their services and call them today at (931) 526-3377 to begin discussing your car insurance coverage needs.