High Risk Auto Insurance Companies

Some people make really bad decisions when driving, and then they find themselves denied for insurance coverage from regular auto insurers. Multiple accidents, DUIs, and other serious violations such as hit-and-runs all add up to create a risk that no regular provider will touch with a ten-foot pole. In such cases, high risk auto insurance companies are the only option for such drivers to find legal coverage.

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Some high risk drivers, such as those convicted of Driving under the Influence, or DUI, have court-mandated insurance requirements that they must fulfill. Finding affordable high risk auto insurance is a tough thing, but most drivers who require such coverage really need a wake-up call to change their driving habits.

What High Risk Auto Insurance Is

High risk insurance can refer to one of two insurance coverage types. The first type is companies that specialize in providing high risk insurance to drivers with a poor driving history.

These companies have very high rates to offset the enormous risk that they are assuming when they insure high risk drivers.

The second type of high risk insurance can refer to a state’s reinsurance pool set up to provide insurance coverage for those drivers who cannot find auto insurance anywhere else, according to the website for the National Association of Insurance Commissioners.

Essentially, each state requires certain auto insurance companies to provide insurance, or pool their insurance offerings, so that high risk drivers can find coverage. In this way, the high risk associated with such coverage is spread around among those insurers who can absorb the high risk.

Each state has its own laws and rules regarding their reinsurance pool, so rates and coverage will vary from state to state. The efforts made by the state to provide insurance coverage to high risk drivers is not for the benefit of those drivers; it is for the benefit of all the other people on the road who might be negatively affected by the poor driving choices of high risk drivers.

Rates are generally very high even with a reinsurance pool, as the cost of the insurance must offset the driver’s risk.

SR-22 Insurance

Some drivers may be deemed high risk by more than just auto insurance providers. Many drivers who have been convicted of serious driving offenses, such as a DUI or causing an accident while uninsured, are required to utilize an SR-22 document. An SR-22 is proof that the driver has the bare minimum amount of coverage required by the state. Generally, SR-22 documents for insurance are required before the state will reinstate a convicted driver’s driving privileges.

There is even specific coverage that meets SR-22 requirements for drivers who don’t own a vehicle but wish to have their license reinstated after a conviction. This coverage provides insurance when the convicted driver operates a vehicle owned by someone else.

Generally, SR-22 coverage is required by a court ruling to ensure that the convicted driver maintains insurance coverage.

Again, the protection is really for all of the other drivers on the road. If a driver who is required by the courts to provide an SR-22 drops his or her insurance, the provider is required to notify the state’s Department of Motor Vehicles.

Since the SR-22 form is a requirement of probation and to reinstate a license, dropping the insurance coverage may be viewed as a violation of probation. At the least, the driver will have his or her license revoked; and at the worst, that driver will likely be facing jail time.

According to the Alaska Division of Motor Vehicles, SR-22 documentation is required for five years after a DUI or breathalyzer refusal. The number of years that state requires SR-22 documentation increases with each conviction. Some drivers may face a lifetime of SR-22 documentation after a high number of convictions.

Why High Risk Auto Insurance Costs More

Auto insurance providers don’t have crystal balls; they can’t see into the future and determine what accidents or violations a driver might commit. They have only a driver’s past history to go on, as well as other behavioral markers that statistically go along with certain driving choices.

A driver’s past history is the number one factor used to determine a driver’s future risk for causing an accident or committing a serious violation, such as a DUI. If a driver has caused accidents in the past, has many speeding tickets, or has been convicted of a DUI, then auto insurance underwriters can only assume that the driver will continue to drive in an unsafe manner.

This means that the driver is deemed as having a high risk of putting in a claim in the future. When an auto insurance provider has to pay a claim, it loses money. To offset the risk of dangerous drivers, those drivers are charged higher rates so that the insurance company won’t lose so much if the driver has to put in an at-fault claim.

As a case in point, the most recent data from the National Highway Traffic Safety Administration, showed that in 2008, 11,773 people were killed in alcohol-related auto accidents. This accounts for 32% of all motor vehicle fatalities in the U.S. in 2008. No insurance company wants to assume the risk that such drivers pose.

Ways to Avoid Needing High Risk Insurance

Car insurance is all about risk, so you need to avoid becoming labeled as high risk if you don’t want to pay auto insurance premiums that are higher than those for teenagers.

If you have not yet been labeled as high risk, now is the time to evaluate your driving behaviors.

High risk driving behaviors are those that are likely to lead to an accident or cause injury. Speeding, reckless driving, and aggressive driving are all behaviors that can get you labeled as high risk. Distracted driving can also be a factor in many accidents, causing you to be labeled as high risk after an accident or two. Furthermore, one of the biggest behaviors that causes a high risk designation–drinking and driving–is a no-brainer and 100% avoidable.

The real problem with high risk drivers is that they are likely to cause injury or death, either to themselves or others. While that danger of injury or death might not be enough for many drivers to change their dangerous behaviors, the soaring cost of high risk auto insurance just might do it. If you don’t want high auto insurance rates, then don’t practice the poor driving habits that lead to them.

High Risk Insurance and Financial Ratings

When searching for a high risk auto insurance company, you need to make sure that the company you choose is on sound financial footing. Hopefully, you have seen the error of your dangerous driving habits, and you need to choose an auto insurance provider who will be there for you in the event of an accident, theft, or other loss.

Many car insurance providers that focus solely on the high risk driver market might not be the best choice.

They may promise really low rates, but low rates for high risk drivers really go against the whole point of auto insurance in the first place.

These company’s rates don’t really match the risk involved with high risk drivers, so they may not follow the industry’s best practices. The company may be extending itself financially, and it may not be there for you if you need to file a claim in the future.

One way to find out if the company you choose for high risk insurance is on firm financial footing is to research the company’s financial ratings. A ratings company like A.M. Best will have looked over the financial data that the company must provide to the state every year, and assign a letter grade to denote the company’s financial strength.

High ratings such as “A”, “AA”, or “A+” show that the company is conducting sound business practices. Ratings such as a “B” are still on the level, but anything lower than a “B” rating should be a red flag.

Low ratings indicate that the company is over-extending itself financially, and it may not be able to honor its fiscal commitments in the future.

Search Online for Rates

One of the best ways to look for the best high risk auto insurance company for you is to use a quotes comparison website online. These websites will take your information and send it out to the insurance providers in your state that handle high risk auto insurance and SR-22 documentation. Those providers then return a quote for coverage to you by phone or email.

You can review all of your quotes to get a better picture of how much high risk auto insurance will cost you. You are under no obligation to buy insurance from any of your quoted insurers, but you should check out the financial ratings of any providers that you are considering.

If you have been labeled as a high risk driver, your best bet is to keep your driving record as spotless as possible and continually search out the best high risk auto insurance company for you.

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