What Is High Risk Auto Insurance?

T.L. Bodine
car accident

If you have ever seen an advertisement for a company offering SR22 insurance, the odds are good that the company sells high-risk auto insurance. This is because, in general, drivers who need to file an SR22 are those who have lost their existing insurance. If a policy has lapsed due to non-payment, or if it's been canceled due to your driving history, you may be deemed too risky for the standard auto insurer. Many companies offer policies specifically tailored to the needs of these high-risk drivers.

Defining High Risk

Insurance companies assess potential customers based on risk level. Essentially, a person who is seen as likely to be involved in an accident will be viewed as "high risk," and they present a higher potential cost to the insurer based on the likelihood of the company needing to pay for a claim. This means that drivers who are viewed as high risk will pay more for car insurance, and they may not be eligible for a standard auto policy.

Several factors can cause a person to be viewed as high risk:

  • A history of multiple accidents
  • Age, particularly for young teens or drivers over age 65
  • A DUI conviction
  • Multiple traffic violations
  • A history of non-payment or allowing a policy to lapse

Since all drivers must carry liability insurance in order to drive legally, there are solutions in place to allow people to obtain insurance even if they would not otherwise qualify for a plan. These high-risk insurance policies can be sold directly to the customer or, in some states, may be mediated through another agency. Policies are sometimes sold under the heading of "nonstandard auto insurance."

Assigned Risk Policies

Some states, such as California and New York, offer "assigned risk" plans for drivers who cannot obtain insurance through any other means. These will be mediated through an organization like the California Automobile Assigned Risk Plan (CAARP), which connects high-risk drivers with policies underwritten by various insurers. Instead of selling insurance directly, CAARP and related organizations act as brokers. The premiums are paid to the broker and passed along to the insurance company. The insurance company in turn pays for any claims filed on the policy.

The purpose of assigned risk plans is to spread out risk over multiple companies insuring a specific area. This prevents a single insurer from carrying too much risk and protects its finances.

If you are unable to find auto insurance on your own in your state, check to see whether an assigned risk organization operates where you live. Your local DMV or independent insurance agency can probably point you in the right direction.

Companies Offering Coverage

Many insurance companies offer high-risk auto insurance. Often, these are the same companies that advertise low-cost insurance and plans that can be purchased and put into effect immediately. By courting buyers who want to pay low premiums, they can sell the same minimal-coverage policies to standard-risk drivers as they offer their high-risk customers, effectively lowering the company's overall risk level.

Here are a few of the most well-known high risk auto insurers:

  • Titan is the non-standard insurance branch of Nationwide. It has the same infrastructure and underwriting support of Nationwide, but it focuses purely on hard-to-insure drivers.
  • Acceptance is available in 12 states, predominately in the south and Midwest, and it caters to drivers looking for affordable rates as well as those who need high-risk coverage.
  • The General is one of the best-known high-risk insurers thanks to its catchy commercials and aggressive direct-sales tactics. Drivers who apply for insurance can often get it approved and print a proof-of-insurance card the same day.
  • AmWINS is an international company offering high-risk auto alongside several other types of insurance, including group benefits for employers and other types of business insurance.
  • Integrity Insurance sells both standard and non-standard auto policies as well as other types of insurance, like homeowners and business. A number of discounts are available even to high-risk customers, allowing you to keep your rates down.
  • UAIC, the United Automobile Insurance Company, specializes in nonstandard auto insurance for individuals and companies.

Many other big-name insurance companies like State Farm and GEICO sell non-standard auto policies as well. Depending on your situation, you may be able to qualify for insurance through one of these companies.

Higher Cost and Minimal Coverage

Since these policies present a greater potential cost to insurance companies, high-risk policies will tend to be more expensive than standard auto policies with the same coverages. The cost difference will depend on your driving record, age and other risk factors, and it will vary from one area to the next. The price difference between policies can vary by state.

Additionally, many nonstandard auto policies offer only minimal coverage, meaning basic liability insurance that meets the levels laid out by the state. Additional coverage may or may not be available depending your situation. It's best to ask the company about what coverage is included in the policy and whether they will cost more than the initial quoted price.

Staying Insured

The good news about being a high-risk driver is that it is a temporary situation. As you build up safe driving experience, you may find that you lose the "high risk" label and can once again qualify for more affordable coverage. To save money on your car insurance in the future, focus on driving safely today and paying your premiums on time so that you never have to deal with a lapsed or canceled policy again.

What Is High Risk Auto Insurance?