High-Risk Car Insurance: Which Insurers Are Cheapest
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In the United States, 45 states have more than 100 car insurance companies for private vehicles, and all the states have at least 50, according to the U.S. Dept. of the Treasury's Federal Insurance Office. These figures suggest a vital marketplace of healthy competition, which is good news for drivers hunting for a low-cost car insurance policy.
But if you're a high-risk driver, you may be worried that high-risk insurance is not within your budget. To make matters worse, if you can't legally drive, your budget is not likely to get any bigger: Indeed, the Federal Insurance Office notes that "unaffordable auto insurance leaves many Americans in the predicament of ... not driving, which dramatically restricts their economic opportunities." In short, you can access many more jobs within a far greater area if you have access to your own personal transportation.
While it is true that high-risk drivers pay higher rates and premiums than other drivers, high-risk auto insurance may not be as pricey as you fear. In fact, while many auto insurance companies have high-risk car insurance that won't break the bank, some companies actually cater to drivers in a high-risk category. This article lays out the what-you-need-to-know basics of high-risk auto insurance and provides tips on how to find an insurance provider that works for you.
Comparing different insurance policies from different insurance companies can be a time-consuming hassle. Even if you find the time and energy to investigate high-risk car insurance, how many companies can one harried citizen be expected to eyeball—two, three, maybe four?
In just minutes, SmartFinancial can compare car insurance rates from every insurance company that does business in your area, pinpointing the best, most affordable insurance solution for your situation. Not only that, its car insurance quotes are free of charge. Either click on the link above or have a one-on-one conversation with a SmartFinancial insurance agent. Just pick up the phone and call 855-214-2291.
Are You a High-Risk Driver?
The insurance industry mitigates risk and liability. Using statistics based on mountains of raw, up-to-the-minute data, an insurance company can make an educated guess as to which drivers pose the most and the least risk. Since high-risk drivers are more likely to file an insurance claim than low-risk drivers, insurance companies naturally charge high-risk drivers more than low-risk drivers for their respective policies and premiums.
While all drivers with a poor driving history are high-risk drivers, not all high-risk drivers have a poor driving history. In fact, you could have an unblemished driving record and still be categorized as a high-risk driver. To understand how this could be, let's take a look at some of the most common high-risk factors:
- One or more car accidents in the past three years
- Multiple tickets and citations
- Bad credit
- Lapse in coverage
- Owning a sports car
- Being a new or teen driver
- Living in a high-risk zip code
- Needing an SR-22 or FR-44
Although your driving record has the greatest effect on your high-risk designation, other factors come into play, too. For example, if you let your auto insurance coverage lapse, insurers will assume that you're not unafraid to take risks and are thus more likely to get into a fender-bender. Teen drivers and new drivers may have a clean driving history, but their beginner's inexperience makes them vulnerable to risk, just as much as the motorist with a clean driving history who parks their car in a high-crime neighborhood.
Of course, it's a given that any insurance company will take a dim view of a bad credit score, no matter how well a driver may fulfill the ideal of defensive driving. While the Fair Credit Reporting Act of 1970 dictates how long certain information can stay on an individual's credit report before it must be expunged, a bad credit score can still take seven to 10 years to disappear--and with great effort.
Since high-risk drivers generally have an increased likelihood of filing a claim, they can have a harder time getting car insurance and usually have to pay more for coverage. But it's important to keep in mind that your high-risk status isn't the end of the story. Since most auto insurance companies look back only three to five years, an auto insurance high-risk rate-payer can get out of the high-risk category within five years, which isn't that long when you think about it. Plus, there are many steps you can take not only to secure adequate, affordable coverage for you and your family but also to help strengthen your current position, both financially and legally, like comparing car insurance rates.
Non-Standard High-Risk Auto Insurance
If you are considered a high risk due to a poor credit score, a bad driving record, an at-fault car accident or, say, a high-crime neighborhood, you should check out high-risk insurance from a so-called "non-standard" auto insurance company. Non-standard insurance firms cater to the high-risk driver, so look out for better-than-average insurance rates for high-risk drivers, even if you have low credit, a terrible credit history, a first-time driver's license or, perhaps, a speeding ticket or three. Several auto insurance companies offer non-standard high-risk auto insurance that insures high-risk drivers:
- Affirmative Insurance
- Alliance United
- Bristol West
- Direct Auto
- The General
- Kemper Auto
- National General
- United Auto
Of these insurance firms, let's take a closer look at Geico, the second-largest private passenger auto insurer in the U.S. The credit-rating agencies Moody's and Standard & Poor's give the nationwide firm excellent marks for its financial strength—that is, its ability to pay claims—and the Better Business Bureau assigns the Chevy Chase, Md.-headquartered company an A+ rating. But what interests us here is the Berkshire Hathaway firm's many coverage options for drivers with a less-than-stellar history.
For example, Geico is known for extending coverage to drivers with a low or poor credit score. In fact, some reports suggest the company has the lowest rates, on average, for most drivers with poor credit. Geico also offers coverage for drivers who have a spotty driving record as well as drivers who have been convicted on a DUI/DWI charge and need SR-22 or FR-44 certification.
Further, the nationwide firm does not turn away customers who have filed multiple claims or admit to gaps in their insurance history. What's more, if you are a teenager, a new driver or a senior citizen, Geico has policies with reasonable, competitive rates, compared to the industry average for the same categories. The company also insures motorists who live in a densely populated area or own a vehicle that has zero safety features.
As you can see, Geico covers many types of high-risk insurance drivers. But insurance coverage for high-risk drivers is never cheap. For example, if you are a high-risk driver due to a DUI/DWI conviction, you can expect Geico to charge you about double what it charges a driver with a clean record. But whether you have a DUI/DWI or some other high-risk offense on your record, your record is not permanent, and it can change for the better. For some drivers, it might be useful to know that, when evaluating your risk profile to determine your individual rate, Geico looks back on your record only three years, not five.
Boasting an excellent interactive online experience, the 85-year-old company has a 24/7 customer help line, 40,000 associates and 17 major offices across the U.S. Geico might just have the policy that meets your needs, but you should always get quotes from more than just one company.
SmartFinancial can help you locate the best car insurance for you and your unique circumstances. To get a free quote, all you have to do is enter your zip code after clicking the link above, or, if you would like to speak to an experienced SmartFinancial insurance agent directly, just dial 855-214-2291 for a free consultation.
How High-Risk Drivers Can Lower Their Rates
When looking for non-standard insurance, you should shop around the free market and solicit as many quotes as possible. While non-standard insurance costs more than standard insurance, comparison-shopping will greatly increase your chances of snagging the most affordable car insurance for the best high-risk coverage. (Note, the only time obtaining non-standard insurance differs from obtaining standard insurance is when the state requires an SR-22 or FR-44 certification from the driver.
Drivers with poor credit should obtain and verify their credit report. It is not unusual for errors to creep into an official credit record through identity theft, incorrect or false delinquency reports, a mistyped Social Security number and files that mistakenly mix in a family member's or even a neighbor's financial transactions, to name a few. It is crucial that you identify any errors in your credit report and then take the appropriate steps to have those errors corrected.
For a small fee, sometimes for free through your bank or credit card company, you can receive your credit report from one of the Big Three credit agencies, Equifax, Experian or TransUnion. The Federal Trade Commission recommends visiting annualcreditreport.com to obtain your credit report for free. If you improve your credit score, you will not only lower your automobile insurance rates but also strengthen your overall financial health. Rest assured, drivers with poor credit can still find relatively low car insurance rates.
If you're a high-risk driver who seeks to lower your insurance rate, take a defensive driving course—it may be just the ticket! Since driving defensively is the No. 1 way to avoid traffic violations—after all, safety-conscious, safety-first motorists are much less likely to receive an at-fault judgement, a DUI conviction or a speeding ticket—many insurance firms will consider this education as a positive indication of a driver's commitment to safe, consistent driving habits. Before signing up for a class or a course, you should check with your agent to verify which programs your insurance company recognizes and approves.
Another way to pay less for your coverage would be to trade in your car for a car that boasts a better safety record and better or more safety features. Of course, a higher-risk driver will get more affordable car insurance if they are driving a 2005 four-door sedan with many safety features than if they are tooling around town in a 2019 two-door sports car with few safety features. But everyone's individual insurance rate will vary according to each individual's history and each insurance company's assessment of risk.
Of course, a high-risk driver, like any driver, should always follow all traffic laws. If you're able to make it three whole years without a moving violation, your auto insurance company may well decrease your premium. State Farm, which offers some very reasonable rates, says it will.
Another way insurance rates can be lowered is through discounts. For example, if you purchase car and home insurance from the same insurance company, you may be eligible for a multi-policy discount. Here are some common discounts you discuss with your licensed insurance agent:
- New vehicle
- Good student
- Multiple policies
- Multiple vehicles
- Anti-theft devices
- Anti-lock brake system
- Air bags
- Anti-theft devices
- Vehicle safety features
- Good driver
- Defensive driver
- Affinity membership alum
These are just a smattering of the available discounts for car insurance. For example, some insurance companies offer discounts for telematics driven data: Telemetry-equipped cars can track vehicle performance and driver behavior, including speed, acceleration rates and braking style. Further, many telemetry-equipped cars send service alerts that can avert longtime car damage and on-road accidents; other telemetry-equipped cars are "connected" cars, meaning they can interact with other cars and certain roadway furniture, such as traffic signs, to improve your overall safety. An insurance company may use this real-time information to evaluate whether your car and your driving habits qualify you for a discount on your car insurance.
Although many discounts offer just a little bit of savings, those savings can easily add up to a tidy sum over the long haul. So check out the discounts at several car insurance companies for the best car insurance rates, especially if you seek car insurance for high-risk drivers.
Another Way to Lower High-Risk Rates
Every state has its own minimum insurance requirements for every driver on the road. If the driver does not have this basic level of coverage, they are either an insured or underinsured motorist. Indeed, they could face legal penalties, from tickets and fines to a license suspension and car impoundment.
Most states demand at least three types of insurance: bodily injury per person (for a minimum liability of $30,000), bodily injury per accident ($60,000) and property damage per accident ($25,000). High-risk drivers can save money if they purchase the minimum insurance coverage demanded by the state for bodily injury and property damage but no other coverage. If you forgo other insurance products that are not mandated by the state—for example, collision, comprehensive, towing and labor, and, in some states, uninsured and underinsured motorist coverage—your rate will be cheaper. But you may be in a bind if you cause an accident and need repairs on your own car or if your car is stolen or vandalized.
Choosing a High-Risk Car Insurance Policy
Insurance companies assess risk and liability differently. While car insurance companies look at many of the same factors—the make and model of the car as well as a customer's age, gender, driving history, credit score and location of residence, among others—each car insurance company will weigh each of these factors slightly differently, depending on that company's algorithms and their parameters.
So, it only makes sense that some auto insurance companies are better for some kinds of insurance than other companies. For example, Allstate has solid rates for new drivers, which includes teen drivers. Car accidents are the No. 2 cause of death among teens in the U.S., according to the Centers for Disease Control and Prevention (CDC). The CDC's research indicates that this age population is more likely to speed, drive aggressively, use a cell phone and neglect seat belts than older, more experienced drivers.
Also, teen drivers are less experienced with poor roadway conditions, dangerous driver behavior and night driving than older, seasoned motorists. Thus, it's easy to see why insurance companies judge teen drivers as more likely to get into a car accident. Remember, adding a high-risk driver to your auto insurance policy will make your rates go up, so consider Allstate for better-than-average rates for your high-risk teen driver.
While Allstate is best for teen drivers or new drivers, Erie is great for people with speeding tickets, American Family is excellent for those who've had accidents, the Hartford works well with senior drivers, and, as mentioned before, Geico is solid for drivers with a bad credit history. When you compare rates, ask the licensed agent if their company has an insurance rate that is better in a certain high-risk category than its closest competitor's insurance rate in that same area.
SR-22 and FR-44 Filings
If you are a driver that has been involved in an at-fault uninsured car accident or, for instance, convicted of a DUI/DWI offense, your state's department of motor vehicles may require you to file an SR-22 form to reinstate your driving privileges. Sometimes referred to as a "certificate of insurance," an SR-22 is not a replacement for personal automobile liability insurance but an add-on; that is, you cannot get an SR-22 certificate unless you meet your state's bare-minimum standard for auto insurance coverage.
Many insurers automatically consider SR-22 drivers to be a high risk, never mind if that driver is newly licensed or has low credit or poor credit. But not every insurance company offers the SR-22 add-on coverage, while many do. Here's a list of some of the major insurers that offer this high-risk coverage:
- Acceptance Insurance
- Dairyland Insurance
- Direct Auto Insurance
- The General
- Infinity Insurance
- Liberty Mutual
- State Farm
- 21st Century
So, if you have an SR-22 requirement due to moving violations, at-fault accidents or, for instance, a driving-under-the-influence conviction, these companies are worth a squint.
On the other hand, while your insurance provider may offer SR-22 services, your state department of motor vehicles may not even require it. Here is a list of the 11 states that do not at any time mandate SR-22 add-on coverage:
- New Jersey
- New Mexico
- New York
- North Carolina
- Rhode Island
But if you do happen to live in a state with an SR-22 stipulation, the price of added SR-22 protection varies from company to company and partly depends on an individual driver's location, vehicle, driving record, insurance history and other parameters. Of course, all this data is used to calculate your individual insurance costs, including insurance premiums.
Let's take some concrete examples: An Allstate policy for $600 may cost up to $700 with added SR-22 coverage. Likewise, a $880 Liberty Mutual policy may cost up to $935, and a $920 State Farm policy could cost up to $1,000. As you can see, the cost of SR-22 coverage can vary from about $50 to about $100, so it pays to comparison-shop. Of course, car insurance premiums—the up-front fee a driver must pay before an insurance company starts to reimburse for damages—also vary, depending on the insurance company and the insured's record.
Florida and Virginia are the only states that demand FR-44 coverage, which is usually required after a DUI/DWI conviction. FR-44 coverage is not unlike SR-22 coverage, but its liability limits are usually about twice the state's SR-22 minimum-coverage mandate. For example, if Old Dominion's state-mandated bare-bones car insurance standard necessitates $25,000 per person and $50,000 per accident for bodily injury and $20,000 per accident for property damage, an FR-44 stipulation will require a driver to have coverage for double those limits.
High-Risk Car Insurance Doesn't Have to Be High Cost
Regarding drivers who are considered high risk, some insurance companies come out on the high side when it comes to price. For example, Anchor charges, on average, about $80 a month, and Safeway charges about $116 a month, while Hallmark ($130), Arrowhead ($225) and Farmers ($250) charge, on average, quite a bit more. However, remember that after five years, these coverage rates typically will go down if you maintain a safe driving record and bring up your credit score.
Other companies have decidedly lower rates. For example, while Bristol charges, on average, $45 for its monthly insurance cost, and Dairlyand expects about $35, Mercury ($30), MetLife ($26) and Kemper ($4) offer rock-bottom prices. The best part is that SmartFinancial compares them all for you.
If there's one message the high-risk driver should remember, it's the injunction to shop around and compare prices from many different auto insurance carriers. Founded in 2012, SmartFinancial has more than 200 partners in the insurance industry and a network of licensed insurance agents. The company uses artificial intelligence, machine learning and next-gen algorithms to find the best, lowest-priced insurance policies for a diverse set of customers. You can get a free quote just by entering your zip code below and answering basic questions. If you dial 855-214-2291, you can speak directly with a SmartFinancial agent for a free consultation.
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