An auto insurance company will classify a driver as either high-risk or low-risk. Drivers who have a poor driving record, a bad credit history, or new drivers, are all considered high-risk. These drivers will be required to have high-risk auto insurance, which ultimately means that they’ll have to pay more for coverage.
The High-Risk Driver
The following factors will classify a driver as high-risk:
- Poor credit history
- Drivers with several traffic citations
- New drivers
- Drivers who have been convicted of a DUI
- Drivers who have had one or more accidents
If you’re considered a high-risk driver, then you’re probably worried that a car insurance company is going to charge too much for coverage. However, in most states, driving without insurance is illegal. Just a single accident can result in thousands of dollars in damage. If you’re caught driving without insurance, you can also risk losing your license and having your vehicle impounded.
However, even if you’re a high-risk driver you can still find the best auto insurance rates that will meet your needs.
Now, it’s time to learn more about auto insurance designed for high-risk drivers.
Insurance Coverage as a High-Risk Driver
While there are auto insurance companies that will only cover drivers with a nearly flawless driving record, there are some companies that offer a type of insurance called nonstandard auto insurance, which is designed for high-risk drivers. There are many reputable insurance companies out there that offer this type of coverage, you just have to do your research.
Comparing Auto Insurance Companies
It’s important for any driver to shop around for a new auto insurance company, but even more important for the high-risk driver. Before you reach a decision and sign on the dotted line, look at several high-risk policies. Often, companies that offer a cheaper insurance premium will provide minimal coverage.
Even High-Risk Coverage Can Be Flexible
Just because you’re a high-risk driver doesn’t mean you can’t find insurance that’s affordable from a reputable company that’s sympathetic to your financial situation. Find insurance providers who specialize in offering high-risk insurance. These companies will allow drivers to customize their payment plan to fit with their monthly budget and pay schedule. Affordable, flexible insurance designed for high-risk drivers is out there, so don’t give up your search to find the right company.
What is an SR-22?
Many people think an SR-22 is a type of auto insurance, but it actually isn’t. It’s an insurance form that an insurance company files with the state to verify that a driver has met the financial responsibility requirements. A state or court will require this form for drivers who have a history of serious driving violations. If you need a company that offers this type of service, you may need to do more research as not all auto insurance companies offer SR-22s.
Will I Be Labeled as High-Risk Forever?
The answer is no. Each state mandates how long a driving penalty stays on a driver’s record. An auto insurance company can offer suggestions regarding what you can do in order to reduce the points on your license. Many high-risk companies will reward their drivers for taking defensive driving courses or attending traffic safety school. By taking these types of positive steps you can effectively clean up your driving record and switch to more affordable auto insurance coverage plans.
When You Can’t Find High-Risk Auto Insurance
If you’re unable to find coverage anywhere, then you may have to turn to a state-assigned risk pool. These pools are a last resort for a driver who needs to obtain auto insurance. Most states will require a driver to exhaust all resources before they apply for state assignment. Once a driver applies to the state, the state department of insurance will choose the insurance company that will provide auto insurance. In this type of program, the premiums will be very high, compared to nonstandard and standard insurers.
High-Risk Coverage Cost
Many major companies tend to raise the rates for high-risk drivers, but again, these higher prices will depend on the insurance company. Each insurance company will use their own formula to assess risk.
What You Can Expect from High-Risk Coverage
In order to understand why they might need high-risk coverage, a driver must remember a basic fact about auto insurance. All insurance coverage is based on risk. Which is why many companies gather as much information as they can about a driver’s background and driving history in order to determine if they’re a low or high-risk. A low-risk driver files fewer claims and doesn’t have a lot of accidents or traffic violations on their record.
Standard and Nonstandard Coverage
While high-risk insurance is very similar to standard insurance, in that the driver will be protected in the event that their car is damaged, there are some important differences between nonstandard and standard coverage.
The biggest difference here involves the cost. When a company insures a high-risk driver, they’re taking on a bigger financial risk compared to taking on a low-risk driver. Because of this, the high-risk driver must carry an increased financial responsibility by paying a higher premium.
An insurance company might also limit who can drive a vehicle. The policy may specify that only the driver named on the policy can drive the vehicle. The policy can even exclude drivers under the age of twenty-five.
If an insurance company catches a driver failing to follow these rules they can reject an insurance claim.
Other High-Risk Insurance Differences
- An insurance company may check the driver’s record more frequently. They might cover auto repairs at a depreciated rate instead of providing the driver with a check that will cover the total cost of repairs.
- If a driver is sued for punitive damages the policy might not provide coverage.
Make sure you read the fine print when you’re shopping around for a high-risk policy. This way you’ll know what is and what isn’t covered.