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Nonstandard Insurance Companies: What Drivers Need To Know

Nonstandard Insurance Companies: What Drivers Need To Know
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Nonstandard insurance companies offer auto insurance to high-risk drivers. Some nonstandard insurance companies are well-known carriers that also cover standard and preferred drivers. Others specialize in nonstandard insurance. Here’s information about how nonstandard insurance works, why someone might need it, and nonstandard insurance companies.

How Nonstandard Insurance Works

Nonstandard insurance usually works like standard coverage. You can pay your premium yearly, monthly, every six months, or every quarter, and your policy limits the amount the insurance company will pay in different situations. Some nonstandard insurance policies don’t cover costs a standard or preferred policy would usually pay. For example, your insurer might not cover your vehicle if you give someone who’s not an authorized user on your policy permission to drive it.

If you choose comprehensive and collision coverage, you’ll typically have a deductible, an amount you must pay before your insurance covers your other expenses after an accident. Because the risks are higher with nonstandard insurance, premiums are usually higher, as well. Many people choose higher deductibles to lower their premiums. However, if you don’t have enough savings, you could have trouble paying a large deductible.

You can also lower your rates by choosing liability insurance only. Most states require a minimum amount of personal injury and property damage liability coverage. This coverage pays any drivers or pedestrians for damage to their vehicle or medical expenses after you get involved in an accident with them. It won’t cover your own repairs or medical expenses, but it can help you avoid a lawsuit if you get involved in an accident that’s your fault.

Reasons People Need Nonstandard Insurance

People need nonstandard insurance for a variety of reason, and insurance companies can have different standards. Regulations can also vary in different states. Here are things that could put you in this high-risk category and raise your rates:

  • A past conviction for drunk driving, also called a DUI or DWI
  • A license that was previously suspended
  • A policy an insurance company canceled in the past
  • A policy that lapsed from nonpayment
  • A gap in your car insurance history
  • A low credit score
  • A history of frequent accidents or traffic tickets
  • Being a new driver
  • Being younger than 25 or older than 75
  • Driving a custom-built or high-performance vehicle with a powerful engine and a high top speed
  • Driving a car with a salvage title that sustained severe damage or was declared a total loss by your insurance company or a previous owner’s provider
  • Living in a neighborhood with high crime rates, especially theft or vandalism
  • Having a foreign driver’s license but not a license issued by your state
  • Buying only the minimum liability insurance coverage required by your state
  • Filing many claims within a short time, even if the damage to your car wasn’t your fault

Switching From Nonstandard Insurance

For many people, having nonstandard insurance is temporary, and they can switch to less expensive standard coverage after a few years. If you’re not sure why you couldn’t get standard coverage, ask your insurance company what you can do to lower your rates. Some companies offer a discount for taking a defensive driving course, for example.

If your credit score is low, pay as many of your debts as you can, and pay all your bills on time. Consider applying for a secured credit card if you don’t have a card already. It works like a regular credit card, but it requires a cash deposit for collateral when you start the account.

Insurance companies often offer tracking devices as part of usage-based insurance (UBI). This equipment records your speed, how hard you use the brakes, how many miles you drive per month, whether you use your phone while driving, and more. Consenting to a tracking device can help you demonstrate to your insurance company that even though you’ve made driving mistakes in the past, you’re a safe, cautious driver today. Tracking can also help you lower your rates if you don’t use your car frequently.

For example, many people own high-performance cars they mostly use to enjoy the open road on weekends. They commute and run errands in another vehicle. Because the sports car spends most of its time in a garage or driveway, the risk of it being involved in an accident is low. In this situation, after installing a tracking device, the insurance rates for a high-performance car can be lower than a sedan or other vehicle you use often. If you get a tracking device and it doesn’t help you save on your premium, you can usually have it removed with no penalty.

Nonstandard Insurance Companies

Some nonstandard car insurance companies belong to larger firms but operate under their own names. Coverage varies by state, and not every insurer operates in every state. Common nonstandard insurance companies include:

  • GEICO
  • Dairyland
  • Infinity
  • Progressive
  • The General
  • Titan
  • Acceptance Auto Insurance
  • Direct Auto Insurance
  • Foremost
  • Safe Auto
  • Kemper Auto Insurance
  • Hallmark
  • Founders Insurance

Should Drivers Choose a Large Carrier or a Small Company That Specializes in Nonstandard Insurance?

If possible, select a large insurance company like State Farm that offers preferred, standard, and nonstandard insurance. According to a study from the Consumer Federation of America, some insurers charge good drivers premiums that are 9% to 15% higher if they used to get their insurance with a specialty nonstandard insurance company.

What Happens When People Can’t Qualify for Nonstandard Insurance?

States offer assigned-risk pools to help ensure everyone can get insurance. People often call this the residual market. In most states, all insurers that operate there must accept a percentage of drivers in the assigned-risk pool. How many they must accept depends on the company’s size within the state. Premiums for this type of insurance are higher than those for nonstandard insurance.

No matter what type of insurance you qualify for, it’s a good idea to get quotes from several carriers and compare prices. Many people who need nonstandard insurance can get a standard policy at a lower rate after a few years.

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

We’re here to help you simplify car care and save, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and opinions expressed are our own.

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About the Author

FIXD Research Team

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

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