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High Risk Insurance

High risk insurance. Everyone who drives has heard the term before. And most people think they know what it means. It seems pretty easy to figure out. Its insurance for bad drivers right? Well, not always. In fact the name is really not appropriate for most of the people who are driving under that label. So what is high risk insurance?

Minimum Liability Coverages

High risk insurance is really any insurance policy that only has the state minimum coverages. That’s it. In my state of Indiana the minimums are $25,000/$50,000/$10,000 or 25/50/10 as its shown on the policy.

These numbers represent your liability coverage amounts for bodily injury (25/50) and property damage (10). As you can see, that’s not a lot of protection. And it is only protection for the “other” driver. There would be nothing to work with towards repair of your vehicle if you were the at fault party in the accident. But why does that make you a high risk driver you say? Maybe you have never had an accident or ticket in your life. Well to fully understand this you need a little background information.

Standard Ins vs Non-Standard Ins

There are two types of insurance companies out there offering you protection on your vehicles. The standard companies are the large well known groups such as Allstate Ins, Prudential Ins, American Family Ins, Progressive Ins, and State Farm Ins to name a few. These are great companies with wonderful coverages and they provide them to the consumer at a fair price in most instances. But you must qualify/ meet their guidelines in order to get coverage from them at the best rates or even get covered at allin some cases from their plans.

Standard Companies

The standard companies rate a potential client by a scoring system. They look at credit score, driving history, age of the drivers in the household, the sex of any drivers, married or single, weather you are a homeowner, a smoker, the city where you live, what type of work you do, how far you went in school, and a whole host of other variables. Then adding all these things up you are given an insurance score. There is a tier system in place  as well. If you score highly by their standards you get the best coverage at the best rates in the best tier. If you have a lower score you are placed into the appropriate tier with progressively higher premiums until you reach a point that you do not qualify for coverage.

Non- Standard

The non-standard companies may have names you are unfamiliar with, such as American Freedom, Affirmative, Atlanta Casualty, Victoria Ins, Alpha Vision Ins, American Premier, just to name a few. They will insure clients that may have a few blemishes on their records or have low credit scores.

The policy you get from a non-standard company most likely will cost you more for less coverage due to the risk you pose for the company. But in some examples the policy will cost you less with the non standard company if all you want is minimum coverage and your driving record is good. Still if you are insured by companies such as these for whatever reason, you are labeled high risk by the standard insurance companies. More and more the term seems to be a marketing instrument.

Today more and more people are falling under the high risk label. The changes in the economy have had a profound effect on the insurance scores. More people are having credit issues now, or have been unemployed and forced to give up coverages to save money. Or have even gone uninsured for a time. Often times with income shrinking and a never ending parade of bills and debt, some drivers are forced to give up their policies and risk driving without insurance. That is a terrible idea, as one accident could destroy your life for now and the future. If you must give up your policy please do not risk driving.

I hope this has cleared up the high risk question for you. If you want to learn more about high risk insurance or any other type of insurance policy please check this blog as we have written articles on this subject in the past.  Drive safe America.

Darryl Brooks

http://insuranceinfoconnection.com

 

 

 

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