Auto insurance companies see three major types of customers: preferable, standard, and high-risk. Preferable drivers are those with not only clean driving records, but also good credit score and eligibility for discounts. A driver who falls into this category pays the lowest premium rate. On the other hand, high-risk drivers have all the bad traits for examples a record full of traffic tickets, previous DUI convictions, and at-fault accidents. High-risk drivers pay the highest premium; in worst case scenario, they may not be able to acquire auto coverage from standard insurance market. Standard drivers stand in between and pay the average rate. There is no national standard for high-risk classification. Insurance companies have their own definitions and use different formulas to classify their customers. The good thing is that there are some obvious signs to recognize if drivers are about to fall into high-risk category.
1.Incident after incident
Recurrent bad incidents can relegate a driver from preferable or standard to high-risk, even when the incidents are accidental. For example, minor fender-bender is not dangerous but recurrent incidents can lead to high-risk classification because insurance company can see this as possible sign of reckless behavior behind the wheel. The same thing applies for red light violations, high-speed driving, and illegal U-turn.
Every insurer has secret formula to do the classification. A traffic violation that bothers one company may not bother the others. High-risk driver designation is different from company to company, and each likes to keep the formula proprietary for competitive reasons. Therefore, it is important to consult an insurer or an agent about the threshold that separates high-risk drivers from the other two types. Of course, an insurance company will not relegate a customer just because one illegal U-turn, but recurrent violation draws insurer’s attentions. When infractions are starting to add-up, a driver should be more careful and take no further chances.
Most states have traffic points system, with which drivers earn points for every traffic violation they commit, whether or not it is intentional. Every additional point leads driver closer to high-risk classification. Major violations such as DUI, hit and run, or at-fault accidents come with higher points. Records for these points are available from DMV. Auto insurer can ask for the data anytime. Thanks to modern technologies, these are like medical records impossible to deny.
At the end of the day, high-risk classification depends on how a driver behaves on the road. It is impossible to stay on preferable category all the time if the behavior behind the wheel indicates otherwise. DUI, speed race, and at-fault accident are clear indications that a driver is high-risk. Insurance companies always do their due diligence and they cannot afford to miss any point on their customers’ records.
In states where auto insurance is mandatory, coverage or insurance lapses are illegal. Police offices at the traffic checkpoint should ask for all necessary documents for examples driver license, car registration, and insurance card. Failure to produce any of those can also lead to high-risk classification.
When an insurer cancels a policy for any reason, the driver may fall into high-risk category. Typical reason for cancellation is late payment, but it can be because of high traffic points or insurance fraud as well.
High-risk Drivers’ Consequences
As a driver relegates to high-risk category, the first thing to expect is cancellation of the current auto policy. There are very few insurers that offer coverage for all types of drivers. Most only provide financial protections for standard and preferable types only. After cancellation, the driver has the obligation to find another insurer to avoid lapses, and then there is the bad news. Most auto insurance companies reject high-risk drivers’ application.
From insurers’ points of view, auto coverage is a profitable commodity as long as they avoid risky customers. History of recurrent violations, late payments, and involvement in accidents are strong indications that the driver tend to file claims. With every claim, the insurer must give payouts up to the limit of the policy. This is not profitable business, hence rejection. The only place from which high-risk drivers can get easy approval is non-standard auto insurance market.
Auto Insurance for High-risk Drivers
Rodney D Young Auto Insurance is one of the most peculiar companies in across the United States. It offers financial protections for all types of drivers regardless of past traffic violation records. The company requires only basic personal data for examples name, age, address, professions to start the process for auto insurance approval. It does not even use credit score as a variable to determine if a driver deserves to get coverage.
Unlike most major auto insurers that operate online and run only big branch offices in big cities, Rodney D Young Auto Insurance has more than 700 branch offices across Texas, Ohio, Nevada, New Mexico, Missouri, Indiana, Illinois, Georgia, Colorado, California, Arizona, and Alabama. As of 2016, the company hires more than 5,200 employees and stations them in those branch offices. The most interesting thing is that Rodney D Young places the offices in public areas such as shopping centers, street corners, office buildings, and grocery stores. The main purpose is to let customers have easy access to the agencies who understand local risks. Nevertheless, the company also provides online portals for policyholders or applicants to request for quotes, submit applications, make payments, or file claims.