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 it. In the same way, people may think that only few obscure and unknown companies offer coverage. You would be surprise to find out how different reality is in terms of non-standard automobile insurance market.

What Is High Risk Car Insurance

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

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

High Risk 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 carriers consider below driver profiles risky and therefore offer more expensive quotes.

   1. Young Drivers
Teenagers are the most dangerous group 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 worst 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 rates for at least 5 years.

   3. Motorists 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 records for 3 years and result in expensive premiums 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 motorists pay more to insure their automobiles. You can find out how much does insurance go up after an at fault accident?

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

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

   7. People with Poor Credit
Having bad credit record can mean 25% higher premium 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 their driving is deteriorating.

   9. Foreign Licenses
Not many firms would insure drivers with International Driver Permits and Mexican Driver Licenses. They will charge a lot more even they do. So, drivers with nonconforming licenses are not favored.

   10. People with Accident Prone Cars
Exotic, sports, fast, modified or powerful vehicles are charged more, 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 atypical about them. And some companies may consider applicants wanting to buy liability only policies to be non-standard but they are not high risk by definition.

Non standard 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 carriers would consider people who want only the state minimum coverage undesirable because most insurers wouldn’t entertain such applicants. So, they may not be bad but they are not typical.

Usually nonstandard auto insurance companies would cover drivers that are turned down by most others. However, a bad risk policies can be sold by a nonstandard insurer or one of the best in the US depending on the group of drivers. For example, youngsters are considered too risky but most firms would offer quotes for them.

How Much Does High Risk Auto Insurance Cost?

In general, nonstandard and high risk coverage is more expensive than coverage offered to good motorists with no complications. Widely accepted view is that policyholders who claimed and likely to claim should pay more 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 group. 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 category is people with DUI and they are likely to pay 2 – 3 times more than the average. Other drivers with various issues pay between 20 – 100% more than safe ones depending on their risk levels, carriers and zip code.

List of High Risk Auto Insurance Companies

As mentioned above, you may be expecting an obscure list of firms here and we will get to that further down. However, it is worth mentioning that there are a few good providers here as well. According to the same ValuePenguin study and other sources, here are some of the top standard auto insurers that offer affordable policies for perilous 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 perilous. For example, teens can get insurance from most carriers while a driver with DUI or foreign driving license may have to find a dedicated firm.

Do Standard Insurers Cover Abnormal and Unsafe Drivers?

Years ago the non standard car insurance market was much less scientific about calculating premiums. Now underwriters have much better risk assessment tools that can separate good from bad pretty efficiently. That is mainly because they use a few more factors when they are offering quotations.

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 tricky applicants with recent accidents, traffic tickets and convictions.

Now top car insurance companies can more adequately price atypical risks and “cherry-pick” or take only the drivers that meet their underwriting guidelines. Therefore larger insurers will feature more and more in this market scraping the top of the barrel. Other providers dig into this market too. In other words, you really need to have pretty bad record if you have to look outside the typical players.

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 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 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 nonstandard car insurance premiums. None of them writes more than 10% of the market and most companies have market shares of less than 2%.

Some drivers are so dangerous that they can’t qualify for even expensive policies. The“last resort” for these people is to turn to state plans designed to insure the uninsurable.

Things to Know about Pure High Risk Car Insurance Companies

There are a few things to be mindful of when you are searching for a policy with checkered history, according to various sources including InsuranceJournal.

  1. Specialized carriers are usually more expensive than traditional ones. That is why you should exhaust your options by getting as many quotes as you can from typical insurers before you consider non standard vehicle insurance providers
  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 providers.
  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 people who want minimum liability cover only to be out of ordinary since it is easy to associate this behaviour with having money problems. To be fair over 72% of US motorists go for full coverage.
  5. In other words, your financial situation can quickly make you an abnormal driver in the eyes of carriers 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 firms with financial strength ratings of B and below to be “vulnerable”.
  8. Several of the specialized carriers are subsidiaries of large standard insurers. For example, you can guess who owns Geico Casualty Co.. 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 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 nonconforming underwriters aren’t always expensive. 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 an ordinary policy. 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. 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 for motorists with bad driving records. 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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