What Is Nonstandard Auto Insurance & Do I Need It?
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By , Content Director
Drivers deemed too high-risk may be dropped by their insurance companies, with no other option for coverage. If you get into accidents or ticketed often, it may be time to ask your car insurance company about nonstandard auto insurance.
Most auto insurance companies offer both standard and nonstandard auto insurance. However, be ready for higher monthly premiums when purchasing nonstandard insurance as it is more expensive.
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Key Takeaways
Nonstandard auto insurance is offered by most major auto insurance companies to drivers who are at high risk for DUIs, accidents and tickets.
These insurance packages are typically more expensive than standard car insurance packages, so those who want to apply may need to rethink their budget.
Some drivers can qualify for nonstandard auto insurance according to their insurance company’s standards, including drivers under 25 or over 75.
What Is Nonstandard Insurance?
Nonstandard auto insurance, sometimes called substandard auto insurance, is for drivers considered too high-risk to be covered by standard policies at standard rates. There is no difference in the processes or coverage for nonstandard insurance, but it's more expensive since there is a greater risk for claims.
Drivers considered nonstandard include those that have:
- Bad driving records
- Multiple accidents
- Been convicted of DUIs
- Multiple accidents
- Little or no significant driving experience
If you are considered an excessively hazardous driver, major insurers may cancel or not renew your coverage, and you will need to find an insurer offering nonstandard insurance. If you require an SR-22 or FR-44, your insurance company must file it for you before you renew your vehicle registration. If you are considering nonstandard insurance, be prepared to pay higher premiums.
How Nonstandard Auto Insurance Works
Risk assessment is a crucial factor that determines not only eligibility for coverage but also the cost of premiums. Insurance providers categorize policyholders into different risk tiers, which are particularly relevant when it comes to nonstandard auto insurance.
Car insurance companies consider the following risk factors:
- Driving Record: A history of accidents, traffic violations or DUIs increases your risk profile.
- Age and Experience: Young or new drivers are often considered high-risk due to lack of experience. On the other hand, senior drivers may also be classified as nonstandard.
- Credit Score: In some states, a low credit score can negatively impact your risk assessment.
- Vehicle Type: High-performance or luxury cars may be considered riskier to insure.
- Coverage Gaps: A lapse in insurance coverage can also elevate your risk level.
After assessing your profile and determining how much risk they’re taking on by insuring you, insurance providers decide your risk tier:
- Preferred Risk: These are the ideal customers with clean driving records and good credit scores. They qualify for standard or even premium policies with low rates.
- Standard Risk: These drivers have average records and moderate risk factors. They usually qualify for standard policies but may not get the best rates.
- High-Risk or Nonstandard: These drivers have significant risk factors such as a poor driving record or lack of experience. They often need nonstandard auto insurance.
What Nonstandard Insurance Covers
The coverage options are similar to standard policies but may have higher premiums or more restrictions. You can usually get the following coverages:
- Liability coverage
- Collision coverage
- Comprehensive coverage
- Medical payments
- Uninsured/underinsured motorist coverage
Optional coverages like roadside assistance or rental car coverage may not be offered or may come at a higher cost. Nonstandard policies may have higher deductibles, meaning you'll pay more out-of-pocket before insurance kicks in.
The Department of Motor Vehicles (DMV) generally does not impose different coverage requirements specifically for nonstandard insurance policies. The minimum liability coverage required by state law applies to both standard and nonstandard policies. However, some states may require high-risk drivers to file an SR-22 form, which proves you have the minimum required insurance coverage.
Who Needs Nonstandard Insurance?
High-risk drivers may need nonstandard insurance. Due to their driving history, these drivers are not eligible for auto insurance under insurers' typical policies. This includes drivers who are young and inexperienced, who have been involved in several accidents, who file numerous claims and whose insurance has lapsed. If you fall into any of the groups below, you might require nonstandard auto insurance.
History of Multiple Accidents and Claims in a Short Amount of Time
Insurers view multiple incidents in a short timeframe as a tell-tale sign of high-risk driving. Because many payments need to be made by the insurance provider, several claims are likewise considered high-risk.
Reckless Driving
Speeding, failing to obey traffic signs and other law violations are all considered reckless driving. Auto insurance companies regard these as high-risk signifiers that can lead to accidents.
SR-22 or FR-44
You'll need nonstandard auto insurance if you require an SR-22 or FR-44. Your auto insurance provider must file one on your behalf before you can re-register your vehicle and qualify for a nonstandard auto insurance plan.
Salvage Title Car Owners
Salvage title cars are particularly high-risk because they have been deemed a total loss or are excessively damaged. These cars are generally unsafe to take on the road and need the appropriate insurance plan.
Luxury Car Owners
A luxury car's value and repair costs make it more expensive to insure. Because of the powerful engine, luxury drivers frequently speed, which makes them high-risk vehicles. However, comparing providers makes it possible to find cheap car insurance for luxury cars.
Lapse in Coverage
A gap in auto insurance payments is considered high-risk. The insurance provider may be exposed to more risk due to lapsed payments.
How Much Does Nonstandard Auto Insurance Cost?
MoneyGeek found that the cheapest nonstandard auto insurance providers are:
- USAA: $1,569
- Travelers: $1,951
As a leading auto insurance provider, USAA specializes in serving military families and shines in areas like financial stability, customer satisfaction and affordability. For those who don't meet USAA's eligibility criteria, Travelers offers a compelling alternative, featuring affordable premiums, robust financial stability, minimal customer complaints and a variety of valuable discounts.
The premiums below reflect the cost of insuring a driver with speeding, accident and DUI violations.
How to Buy Nonstandard Auto Insurance
Buying nonstandard auto insurance involves a few extra steps compared to purchasing a standard policy.
Assess Your Needs
Standard: Identify the types of coverage you need (liability, collision, comprehensive, etc.).
Nonstandard: In addition to identifying coverage types, consider any high-risk factors that make you eligible for nonstandard insurance, such as a poor driving record or a lapse in coverage.
Research Providers
Standard: Look for well-known providers with good customer reviews.
Nonstandard: Focus on companies that specialize in high-risk or nonstandard policies.
Get Quotes
Standard: Online quotes are readily available.
Nonstandard: Online quotes may be limited; you might need to speak directly with agents who specialize in high-risk coverage.
Compare Policies
Standard: Compare premiums, deductibles and coverage options.
Nonstandard: Pay special attention to any restrictions or limitations, as nonstandard policies often have more.
Check for Discounts
Standard: Many standard policies offer discounts for good driving, bundling, etc.
Nonstandard: Discounts may be limited or not offered at all.
Finalize the Policy
Standard: Usually done online or over the phone.
Nonstandard: May require additional documentation, like proof of prior insurance lapses or SR-22 forms.
Make the Initial Payment
Standard: Pay the first month's premium to activate the policy.
Nonstandard: The initial payment may be higher due to the elevated risk.
Receive Proof of Insurance
Standard: Usually sent via email or available for download.
Nonstandard: May also be sent via email, but double-check for any additional forms or documents you may need to carry.
Review and Renew
Standard: Policies often last six months to a year, with an option to renew.
Nonstandard: Keep an eye on your driving record; improving it could help you transition to a standard policy at renewal time.
Buying nonstandard auto insurance often involves more direct communication with agents and a closer look at policy restrictions. It's key to understand the terms and conditions fully, as these policies are tailored to drivers who are considered high-risk.
Always aim to improve your driving record so you can eventually transition to a standard policy with better rates and coverage options.
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What If No One Will Insure You?
If you find yourself in a challenging position where even a nonstandard auto insurance company denies you coverage, don't lose hope. There are alternative routes to secure the car insurance you need to stay legally on the road.
Here are some options:
State-Run Insurance Programs
Some states offer insurance programs specifically designed for high-risk drivers who can't obtain coverage through traditional means. These are often referred to as "assigned risk" or "residual market" programs.
Joint Policies
If you live with someone who has a better driving record, you might be able to become a named driver on their policy. However, this could significantly increase their premiums.
Commercial Insurance Providers
Some commercial auto insurance providers offer personal car insurance policies for extremely high-risk drivers, albeit at a much higher cost.
Pay-Per-Mile or Usage-Based Insurance
Usage-based or pay-per-mile insurance policies can sometimes be an option. These policies base premiums on your driving behavior, monitored via a mobile app or a device installed in your car.
Keep in mind that driving without insurance is illegal in most states and can result in hefty fines, license suspension and even imprisonment.
If you find yourself unable to secure even nonstandard insurance, it's crucial to explore these alternative options. Always consult with insurance advisors and legal experts to ensure you're meeting your state's requirements for auto insurance.
Frequently Asked Questions
Understanding nonstandard auto insurance is helpful for high-risk drivers. Learn more about what it is and who needs it below.
About Mark Fitzpatrick
