If you own an auto insurance policy, there is a good chance that your insurer classifies you as either a standard or non-standard risk. Some companies have a separate non-standard rating tier, while others have a separate non-standard company with a similar name as its standard company. It is important for policyholders to determine if they are classified as a non-standard risk, and if so, to gain an understanding of how they can qualify for standard rates.
Normal auto insurance risks generally qualify for a standard insurance company. "Normal" can be classified as having a minimal amount of accidents and violations as determined by the company's underwriting guidelines. Non-standard companies are reserved for individuals who have been involved in numerous accidents and may have major violations like DUI, reckless driving or license suspensions on their record. Drivers who have had previous lapses in coverage or don't currently have insurance may also be placed in a non-standard company for a period of time.
Drivers who qualify only qualify for non-standard companies typically pay a much higher premium than standard policyholders, as they are perceived as less acceptable risks. These companies also may not offer discounts that are available in the standard market, such as those for favorable driving records or for not having an at-fault accident for a certain period of time. As a result, non-standard policyholders may choose to carry only the state minimum insurance requirements to keep the premium as low as possible.
Qualifying for Standard Rates
Depending on the company, a policyholder will typically need to remain in a non-standard company until she is eligible for standard rates. At that time, she may need to complete a new application and undergo the normal underwriting process. The policyholder may also need to remain in the non-standard company for a specific period of time, such as six months or a year, before she can be considered for the standard company.
A policyholder may not necessarily be aware that he is in a non-standard company or that he will have the opportunity to apply for standard rates. For example, a policyholder insured by Allstate Indemnity, which is the non-standard company of Allstate Insurance in many states, may think he has a typical Allstate policy. Many insurers do not inform their policyholders that they are with a non-standard company, so the policyholder bears the responsibility of ensuring he is receiving the best possible rate from his insurance carrier.
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