High Risk Car Insurance

It is tough having to pay for a high risk auto insurance policy. One of the things that people find difficult about this is that “high risk” is such a subjective opinion, and means different things to different people. Let's take a look at high risk automobile insurance, and put things into perspective.

Although auto insurance is currently regulated at the state level in the United States, most states allow the insurance companies some flexibility. They can make modifications to the plan coverage form, and have a wide latitude when it comes to choosing which applicants to accept. They also have some latitude as to how they apply the state approved rate structures to each customer. This is particularly important when considering the high risk customer, because it means that not all car insurance companies are going to judge the same consumer as “high risk”.

There are several common factors that most automobile insurance companies will automatically label as high risk in a client. These include multiple (more than two) accident at fault within three years, multiple (more than three) not at-fault accidents within two years, insuring a luxury car a low credit score (under 525), a major driving violation (Vehicular Homicide, Reckless Driving), no prior insurance coverage (or gap in coverage more than 30 days) or a SR-22 Filing Requirement.

Some of these factors can be corrected by the consumer, in a year or less. This means they can then be moved to a “standard” insurance company and pay less premium. These would include improving their credit and maintaining insurance coverage for the full year. Other issues can be managed through proper insurance company selection. Some insurers, for example, will not raise premiums dramatically, for the first DUI offense, if there are no other violations and the potential insured has a good credit score. Other insurers have a very minimal fee for an SR-22 filing, and one or two will specialize in writing those high value vehicles.

Shopping for more competitive automobile insurance premiums is going to be more challenging for a high risk potential insured, but it very well could be worth a few hours of effort. Sometimes an existing insurance agent, if used, will automatically refer a potential insured to the state assigned risk, reinsurance, or facility auto pool – which is probably going to be the most expensive option. Checking rates online or with a few other local agents, could end up saving a considerable amount, over the state “last resort” auto insurer.

Using a local agent, or calling the prospective insurance company directly, could also result in getting additional credits applied to the account, to lower the premiums. Some of the lesser known credits, can include aftermarket anti theft discounts; home ownership discounts; various driving school discounts (they aren't just for teens, in some states!), and the “package credit” for having homeowners or renters insurance with the same company. Yes, purchasing a second contract, such as homeowners insurance, could save $400 or more in discounts on a high risk auto policy. Of course, some of insurance carriers that write this type of automobile policy, don't write dwelling insurance. It's important for the customer to get the most coverage for the best price.

When a potential insured is facing the prospect of a high risk auto insurance contract, it pays to look beyond the label, do some homework and some legwork, and take these few simple steps to get the automobile insurance contract premiums back under control. A broker should be doing some of the work for the consumer. If a broker can't or won't sit down and help you understand your policy choices, and devise a plan to eventually move out of the high risk marketplace, it's time to find a new broker.