High Risk Auto Insurance Companies

The term high risk car insurance may suggest that only handful of people would fall into this category. However, 30 – 40% of drivers can fall into this risk profile depending on who is defining high risk. In the same way, people may think that high risk auto insurance companies would be few obscure and unknown insurers. You would be surprise to find out how different reality is in terms of non-standard auto insurance market.

What Is High Risk Car Insurance

Perhaps we should start with defining what is high risk and non standard auto insurance. There are 5 key risk profiles that are agreed upon and they are; Preferred Risk, Standard Risk, High Risk, Non Standard Risk and Assigned Risk.

Preferred risk profile defines the drivers with long and spotless driving history. Any vehicle insurance company would love to insure such group of people. Standard profile is probably the largest driver group that hasn’t got a perfect record but there isn’t any real concern for insurers to insure them either. Assigned risk profile describes group of drivers who are the least desired and they may be declined by almost all insurers including non standard car insurance companies. This leaves us with two groups of drivers.

High Risk Auto Insurance is more to do with who is insured than type of a policy. If insuring a particular driver (or car) would mean higher likelihood of claims insurers categorize that application as high-risk and demand higher premiums.

Risky Driver Profiles

Most insurers consider below driver profiles risky and therefore offer high risk auto insurance quotes.

   1. Young Drivers
Teenage drivers have the highest risk profile even though they haven’t done anything yet to deserve this categorization. The reason for their classification is the lack of personal history and negative statistical data against them. They are 4 times more likely to get involved in a fatal car crash and that is why they are charged nearly 3 times more than a standard driver.

   2. Drivers with DUI Offences
auto insurance with bad driving historyOnce you are convicted with Driving Under the Influence you will most likely need SR22 insurance before you can get your license back. SR22 is a proof of insurance that needs to be filed with DMV. SR22 is the highest risk an insurer can carry and you may need to file it for 5 – 7 years until your DUI comes off your record. So, you should expect one DUI affect your car insurance rates for at least 5 years.

   3. Drivers with Speeding and Reckless Driving Tickets
Speeding and reckless driving tickets are the next group of tickets that affect your rates the most. They usually stay in your driving records for 3 years and insurers charge higher rates during this time.

   4. Drivers with Recent at Fault Accident Claims
At fault accident or relating liability claims affect your rates more than any other claims. Since you are found to be at fault there is no excuse left to offer. Careless drivers pay more to insure their automobiles. You can find out how much does insurance go up after an accident?

   5. New Drivers
No matter how old you are being a new driver will put you in the risky drivers category without a question. However, it is easier to get cheap car insurance for first time drivers over the age of 25, in comparison to teenagers.

   6. Drivers with No Recent Insurance History
Most insurers treat drivers with lapse in car insurance coverage unfavorably, regardless of the reasons behind the lapse. Insurers don’t like policyholders who are likely to cancel on them.

   7. Drivers with Poor Credit
Having bad credit record can mean 25% higher car insurance with some companies since they consider people with money problems to be highly likely to make a claim.

   8. Older Drivers
Motorists may start seeing premium increases on their traditional policies after the age of 75 that indicates they are becoming high risk for some companies.

   9. Drivers with Foreign Licenses
Not many insurance companies would insure drivers with International Driver Permits and Mexican Driver Licenses. They will charge a lot more even they do. So, drivers with nonstandard licenses are considered high risk.

   10. Drivers with High Risk Cars
The car you want to insure can make you high risk if it is an exotic or a sports car, especially if you are under the age of 25 yet.

What Is Non Standard Auto Insurance

Terms “high risk” and “nonstandard” seem to be used to mean the same thing. This is not necessarily true. Teenage drivers may be high risk but nothing nonstandard about them. And some companies may consider drivers wanting to buy liability only car insurance to be non-standard but they are not high risk by definition.

Non standard auto insurance covers drivers that fall outside the normal risk profile and therefore considered high risk. They may have confirmed issues like DUI or they may be assumed risky because of issues with their driving licenses, coverage requests, backgrounds or other details.

For example, people with a Mexican driver’s license or an International Driving Permit (IDP) would need to look into nonstandard market. This can be a large number of people in some states like Texas, California and Florida. And some companies would consider people who want only the state minimum car insurance coverage to be nonstandard because most insurers wouldn’t entertain such applicants. So, they may not be extremely risky drivers but they are not standard.

Usually nonstandard auto insurance companies would insure drivers that are turned down by most insurers. However, a high risk car insurance company can be a nonstandard insurer or one of the best insurers in the US depending on the group of drivers. For example, young drivers are considered high risk but most insurers would offer quotes for them.

How Much Does High Risk Auto Insurance Cost?

In general, nonstandard and high risk car insurance coverage is more expensive than coverage offered to good drivers with no complications. Widely accepted view is that drivers who claimed and likely to claim should pay higher premiums in order to prevent these claims to increase rates for careful drivers who are low maintenance.

According to a ValuePenguin study, young drivers pay more than any other driver risk profile. On average, they are likely to pay 3 – 5 times more than an average driver depending on the state they live in. The next most expensive driver category is drivers with DUI and they are likely to pay 2 – 3 times more than the average. Other high risk and nonstandard drivers pay between 20 – 100% more than standard drivers depending on their risk levels, insurers and zip code.

List of High Risk Auto Insurance Companies

As mentioned above, you may be expecting an obscure list of non standard auto insurance companies here and we will get to that further down. However, it is worth mentioning that there are a few good companies for high risk auto insurance. According to the same ValuePenguin study and other sources, here are some of the top standard auto insurers that offer affordable car insurance for high risk drivers.

  1. GEICO
  2. Allstate
  3. Nationwide
  4. Progressive

This highlights the need to check with traditional insurers before moving on to specialized high risk vehicle insurance companies because the latter is usually more expensive.

It is true that you will not have as many or as good options as a driver with preferred or standard risk profile. Nonetheless, the list of high risk automobile insurance companies that can help you will grow or shrink depending on why you are considered a high risk driver. For example, young drivers can get insurance from most insurers while a driver with DUI or foreign driving license may have to find a dedicated high risk auto insurance company.

Do Standard Insurers Offer High Risk Car Insurance?

Years ago the nonstandard auto insurance market was much less scientific about calculating risks. Now companies have much better risk assessment tools that can separate good risk from bad pretty efficiently. That is mainly because they use many more factors when they are offering high risk car insurance quotes.

Premium calculation algorithms have improved, and most importantly rate tiering is more prominent now than it’s ever been. Larger insurers feel justified to invest in technology that allows them to break the risk groups into so many layers. As a result they can predict who is likely to make a claim much better and accept more of the drivers with recent accidents, traffic tickets and convictions.

Now top car insurance companies can more adequately price nonstandard risks and “cherry-pick” or take only the drivers that meet their underwriting guidelines. Therefore larger insurers will feature more and more in the high risk car insurance market scraping the top of the barrel. Other standard insurers dig into this market too. In other words, you really need to be pretty high risk driver if you have to look for nonstandard auto insurance companies.

Non-Standard Auto Insurance Companies List

Below rankings are compiled by NerdWallet and are based on average complaints each company has been receiving in recent years. The “complain index” numbers are reached by dividing each company’s share of total complaints by their market share. An index number of 1 is the industry median. But every company on this list of high risk auto insurance companies has higher than 1  complain index. Financial strength ratings reflect a company’s ability to pay claims. A.M. Best considers companies with ratings of B and below to be “vulnerable”.

Rank by Avg.
Complaints
Nonstandard
Company
Average
Complaint Index
A.M. Best Financial
Strength Rating
1 Geico Casualty 1.2 A++ (Superior)
2 Dairyland 2.0 A+ (Superior)
3 Titan1 2.0 A+ (Superior)
4 Safe Auto 2.1 A+ (Superior)
5 Gainsco 2.2 B++ (Good)
6 Victoria1 2.2 A+ (Superior)
7 Bristol West2 2.3 A (Excellent)
8 Infinity 3.4 A (Excellent)
9 Affirmative 3.6 Not rated
10 The General3 3.6 A- (Excellent)
11 Alliance United 4.1 Not rated
12 Direct General 4.3 B (Fair)
13 United Automobile 5.7 C (Weak)
14 Access 8.0 Not rated

1 Subsidiaries of Nationwide Insurance
2 Subsidiary of Farmers Insurance
3 Subsidiary of American Family Insurance

Sources: Complaint data from the NAIC, A.M. Best ratings as of Sept. 5, 2015.

The nonstandard auto insurance market is highly concentrated geographically. Texas, California and Florida account for 59% of all direct premiums written in 2013, according to A.M. Best. The remaining 40% of business is spread more evenly throughout the US, with no other state having more than 5% of non-standard car insurance premiums. No high risk car insurance company writes more than 10% of the market and most companies have market shares of less than 2%.

Some drivers present such a high risk that they can’t qualify for even high risk auto insurance. The“last resort” for these people is to turn to state plans designed to insure uninsurable drivers.

Things to Know about Pure High Risk Car Insurance Companies

There are a few things to be mindful of nonstandard car insurance companies according to various sources including InsuranceJournal.

  1. Specialized high-risk auto insurance companies are usually more expensive than traditional insurers. That is why you should exhaust your options by getting as many quotes as you can from standard insurers before you consider non standard vehicle insurance companies
  2. Driver profiles can improve in time that categorization of a “high-risk driver” is usually a temporary label for most policyholders. When this happens you can switch to a traditional insurer.
  3. At times, you may actually be getting less coverage even though you are paying more with some of the non-standard auto insurance carriers.
  4. Non-standard policies may have high number of cancellations, policy reinstating and switching carriers. This may be because large number of these policyholders may come from low-income background and simply may not have the money to pay for policies. That may be why some insurers would consider drivers who want only minimum liability car insurance to be nonstandard since it is easy to associate this behaviour with having money problems.
  5. In other words, your financial situation can quickly make you a nonstandard driver in the eyes of insurers if you don’t watch out.
  6. Larger companies may handle these risks better and therefore can quote competitive premiums.
  7. A.M. Best considers companies with financial strength ratings of B and below to be “vulnerable”.
  8. Several of the specialized nonstandard automobile insurance companies are subsidiaries of large standard insurers. For example, you can guess who owns Geico Casualty Co., a nonstandard car insurance company. Nonstandard insurer The General is subsidiary of American Family Insurance. Nationwide owns Titan and Victoria, and Farmers owns Bristol West.
  9. These companies usually get more complaints from their policyholders for denial of claims, unsatisfactory and delayed settlements. These policyholders may feel they were trapped due to lack of choice and this feeling may account for some of the complaints.
  10. This market sees high number of acquisitions and larger ones buy smaller firms.

Things to Remember for the Best High Risk Auto Insurance

   1. Always Compare High Risk Car Insurance Quotes
As discussed in detail above, you never know which insurer comes up with the best rates for you. You may be a difficult case and already declined by several insurers but you should keep looking for more quotes until it is clear that you run out of options and need to make a decision. Remember high risk car insurance companies aren’t always the expensive nonstandard carriers. A risky driver can find a decent coverage from one of the top providers.

Luckily, online auto insurance quotes and comparison websites like this one makes getting quotes a breeze. You can probably get around 10 quotes in just over an hour. When you have a high premium even a little discount can mean a lot of dollars.

   2. You Can Probably Rectify Your Risk Profile
A recent at fault accident or DUI conviction will affect your rates several years. However, their affect will be less and less every year and one day they will drop from your driving records. So, you shouldn’t despair but look ahead and avoid further aggravations in terms of your driving history. Also, you should try to overcome other issues that may make it difficult to get standard car insurance. For example, you can try to pass your states driving license tests if you have an International Driving Permit. Or you can try to improve your credit score if that is the problem.

   3. There Are Other Ways to Lower your Rate
These days there are so many ways of getting discounts on your premium. So you should check here to find out how to save money on car insurance. There are a few ways outlined in that post that can help anyone to find a lower premium. Discounts are offered for various reasons other than driving records or experience. For example, you may be able to get discounts for being a member of certain automobile associations or clubs. Another option may be to make adjustments to your driving habits like reducing mileage to qualify for low mileage car insurance. Another option is to get pay as you drive insurance to show that you are not as risky as it looks.

   4. You May Need to Be Extra Mindful when Buying a Car
It may be over-optimistic to expect cheap full coverage car insurance for high risk drivers. When you need to pay 4 – 5 times more than a standard driver you may have to look for every saving opportunity including buying only the essential coverage. You can comfortably drop Collision and Comprehensive coverage when you own an automobile you can afford to lose. So, it may be a good strategy to buy a cheap but reliable first car for teenage drivers and buy liability only car insurance for the first couple of years. This is just an idea and worth considering before you get too excited and end up buying any car.

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