What Are Nonstandard Insurance Companies?

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Most drivers are aware of different forms of vehicle insurance, like temporary car insurance, motorcycle insurance, and RV insurance. However, you should also know about nonstandard vehicle insurance. This is a special automobile insurance policy designed to provide coverage to drivers who can’t obtain standard car insurance because they present a higher risk.

Though you might not require a nonstandard auto insurance policy now, this could change in the future.

Here’s what you need to know about nonstandard insurance companies and which drivers require non-standard insurance:

What are nonstandard insurance companies?

Nonstandard insurance companies are simply insurers that offer nonstandard auto insurance policies to drivers who have special insurance needs. These individuals typically can’t secure standard insurance and are usually new drivers or those that insurance carriers consider high-risk.

Some companies, such as the New York Automobile Insurance Plan, use a tiered program that groups qualifying non-standard drivers together with the intention of helping them transition to a more favorable tier, and eventually, help them obtain standard car insurance.

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Should I get nonstandard auto insurance?

It depends. Many drivers may have no other option than to get a nonstandard auto insurance policy.

One reason you may need a nonstandard auto insurance policy is if you drive a rare or high-value vehicle that a standard policy may not provide proper coverage for, regardless of your driving history.

Other reasons you may require a nonstandard auto insurance policy include:

  • You’re new to driving.
  • You have a poor driving history (including many accidents and tickets).
  • You haven’t consistently paid your auto insurance premium, or you have a record of repeated insurance cancellations or nonrenewals.

Learn More: What is Temporary Car Insurance?

The pros of nonstandard car insurance

Nonstandard car insurance isn’t necessarily a bad thing — in fact, it’s the only way many drivers can obtain a policy. Benefits of having a nonstandard insurance policy include:

  • These policies provide coverage for new drivers.
  • It’s an accessible option for foreign drivers getting their first U.S. license.
  • They allow you to begin improving your record and relationship with insurers.
  • You may be able to get more comprehensive coverage with a nonstandard policy than you would with your state’s risk pool (with a risk pool, insurers must accept the drivers that the state assigns to them).
  • Insurance carriers are able to offer coverage options to as many drivers as possible.

The cons of nonstandard car insurance

No car insurance policy is without its drawbacks. Some of the cons of nonstandard car insurance policies include:

  • Depending on your record, you may find it difficult to find a policy with suitable coverage.
  • You’lll likely have a higher premium than you would with a standard policy.
  • You may need your insurer to file an SR-22 form on your behalf.
  • The insurance company is taking on a significant financial risk by covering a high-risk driver.

How is nonstandard insurance different from standard insurance?

Most states require a driver to have some level of car insurance. You’ll typically need an insurance policy with coverage for bodily injury liability and property damage liability, at a minimum.

Standard insurance and nonstandard insurance policies achieve the same goal: They provide you with, at the very least, the minimum coverage your state requires. The two biggest differences between nonstandard and standard insurance are the cost of coverage and the reasons why you require either policy.

Nonstandard insurance isn’t a choice, but rather, a necessity. Drivers with nonstandard policies need to choose these policies because they’re unable to get standard insurance. Drivers who fall into the standard category have more freedom to shop around.

Example: If you’re a driver who recently received your driver’s license, you may be seen as a high-risk driver in the eyes of an insurance carrier. Your lack of driving history may require you to get a nonstandard policy until you’re considered experienced enough for a standard policy.

If you maintain a clean driving record and remain in good standing with your insurance provider, you’ll likely qualify for a standard insurance plan.

On the other hand, a driver with a standard policy won’tautomatically qualify for renewal. Multiple accidents or traffic violations within a short period of time could cause you to be considered high-risk. Some standard auto insurance companies might refuse to offer a standard policy to a high-risk driver — in this situation, you’d require a nonstandard insurance policy.

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Disclaimer: All insurance-related services are offered through Young Alfred.

About the author

Nick Dauk

Nick Dauk is a Credible authority on personal finance. His work has been featured in Business Insider, The Edge, Bisnow, The Telegraph, BBC, and Culture Trip.

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