By Ed Sneineh

What is high risk insurance? Generally speaking high risk insurance refers to coverages that provide insurance protection for imperfect risks, or risks that are under the satisfactory standards set by the most preferred insurers in that field. For instance, in health insurance someone who is diabetic is a high risk, and insurance policies covering them are called high risk insurance policies. In the car insurance business, someone who does not fit the guidelines set by the “standard or preferred carriers” is recognized as high risk. A building that is left unoccupied because of an existing fire damage is also classified as high risk.

In the car insurance business, high risk operators refer to individuals who are not “preferred risk.” Preferred risk is normally set by preferred & standard companies. To understand what high risk is about, it might be a good idea to define the preferred risk ,first.

A preferred risk in the auto insurance is a person who scores high on the following points: (a) Has high score on credit report, (b) live in low risk community, (c) has sharp driving record, (d) owns his/her own condo, (e) owns many autos. The better you score on these points, the more preferred you are! Low combined score on the above factors means that the person may belong to the high risk people in the auto insurance business.

If one has an imperfect driving record, they may believe that they need to go into the ‘high risk pool.’ That is not always the case, however. Here are a few factors to determine if you require one of the available high risk car insurance policies available today.

Description of High Risk Car Insurance:

1. No credit score verified.

2. Offers basic liability, most of the times.

3. Although dubbed ‘low cost’ insurance, the premium is higher per unit of liability coverage or value of insured vehicle.

4. Customer services and claims are not handled with the same spirit as in preferred situations.

People Who Need High Risk

Typically the only times where a professional insurance agent should suggest high risk policies are the following:

a. When the client does not fit any criterion of preferred or standard companies to the point where he is ineligible for their car insurance policies. This includes people with DUI or extreme number of tickets and accidents.

b. If the cost is too high where the customer will not pay for it because he/she cannot afford it. Typical examples of people who belong to this category are people youthful drivers (under age 24) or old drivers (over 70 years) who live on limited budget, but their insurance is too high because of their age. Also, unemployed people with no income may fit here.

c. In some instances where the drivers have international licenses, or foreign licenses such as Mexico license, high risk may be the only option, as standard and preferred companies will not insure those risks.

Who Should Never Purchase High Risk Policy?

Generally speaking, wealthy people who can afford high protection or policy with high liability limits with preferred companies should never purchase the low liability, high risk policy. Insurance cost should be only one factor, and not the main one. Keep in mind that insurance is to protect wealth, assets and income. So if you have larger wealth, or larger assets, or have big income; or you are expected to belong to these classes in the near future, then you surely do not want to get low cost, high risk insurance.

It is good to remember that high risk insurance policies should be a short-term situation. Constantly look for other preferred or standard policies that fit your changing needs and budget. Here, it is good to recite what most financial planners explain: Failing to plan is planing to fail in life!

About the Author: Ed Sneineh, Chicago Auto Insurance Agent since 1989, former college educator of insurance, & founder of Chicago based Insurance Navy, a leader in providing affordable

Chicago auto insurance quotes

. Visit us and get your

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Source:

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