What is “high risk” insurance and who needs it?

High risk insurance resulting from car accident

Contrary to popular belief, “high risk” insurance is not just for drivers with risky or dangerous driving habits. It can apply to good drivers, too, and it even applies to some homeowners.

High-risk insurance (also known as non-standard coverage) exists for people who aren’t eligible for coverage from standard insurance companies. Here are six of the most common reasons why you may find yourself shopping for a high-risk car or home insurance policy:

  1. Your policy was cancelled because you didn’t pay your premium. Non-payment is the most common reason why insurance companies cancel policies. If you don’t pay your premium and your policy is cancelled, the cancellation will show on your record and you may no longer qualify for standard insurance.
  2. You’ve had multiple driving convictions or multiple accidents. This one is pretty obvious. If you rack up tickets or you’re frequently involved in accidents, your driving habits may be considered dangerous. You may no longer be eligible for standard car insurance, and your existing policy could be cancelled. Your broker would then help you find coverage with a company that provides insurance to high-risk drivers.
  3. You’ve made multiple claims. When you’ve made several claims on your insurance policy and your current insurer determines they can no longer provide you with coverage, you’ll likely need to look for a new policy with a high-risk insurance company.
  4. Your home is vacant. The term “vacant” usually refers to houses where the owners have moved out and don’t plan to return, or newly built houses where the owners have not yet moved in. Generally speaking, once your home has been vacant for an amount of time set out by your insurer (six months, for example), you will no longer qualify for coverage under your regular policy.
  5. You want to insure a stand-alone rented dwelling — in other words, you’re looking to insure your rental property, but not your main residence. Let’s say you decide to move back in with your parents and rent out your own house. In the insurance world, your house would be considered a “stand-alone rented dwelling” since you plan to rent it out and have no other home to insure. Most standard insurance companies won’t insure stand-alone rented properties unless you also purchase a policy for your own residence.
  6. You’ve taken out multiple mortgages on your home. Homeowners who carry multiple mortgages generally don’t qualify for standard home insurance policies. This includes mortgages from private lenders.

If you’ve been denied standard home or car insurance coverage, ask your broker about your high-risk insurance options.

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