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Nonstandard Auto Insurance Guide

Nonstandard Auto Insurance Guide
Matthew Collister
Updated August 21, 2022
5 Min Read

In auto insurance, the term “nonstandard” refers to a category of drivers considered riskier to insure than most others. Because of this risk, insurers require those drivers to buy nonstandard auto insurance. 

Most aspects of nonstandard auto insurance are the same as any other policy. However, nonstandard auto insurance almost always costs more in premium. The process for buying a nonstandard auto policy may also differ slightly, depending on why the driver is considered a higher risk.

Nonstandard car insurance versus standard car insurance 

Most manufacturers know exactly what it costs to produce their products (raw materials, labor, shipping, marketing, etc.) and can charge you accordingly. 

Insurance isn’t like that. While insurance companies know some of the costs of providing you with a policy, they don’t know how much they'll have to pay you to settle claims. So when your insurance company sells you a policy, the premium is mainly based on a prediction of the amount of claims settlement money they’ll have to pay you in the future.

To help make that prediction, the insurance company collects a variety of information to help it assess the likelihood — or the risk — that you’ll file a claim. This includes your driving record, where you live, and the type of car you drive. They may even look at information such as your credit history. And by analyzing this information, the insurance company can place you in a category based on the level of risk you present. These categories are commonly labeled as nonstandard, standard, and preferred.

  • Nonstandard is for the riskiest drivers: These drivers may have a record with many moving violations, a history of accidents, lack of experience, be very young or elderly, have a gap in their insurance coverage, or drive a high-powered car or car with a salvage title.
  • Standard is for lower-risk drivers: These drivers tend to have cleaner driving and accident records, are mature adults, have continuous insurance history, and drive modest cars.
  • Preferred is for the lowest risk drivers: These tend to have the most experience behind the wheel and the cleanest driving histories.

For the most part, insurance companies will provide the same coverage options to all three categories. What differs is how much you pay for nonstandard auto insurance: Unfortunately, you can expect to pay a much higher premium.

How does nonstandard auto insurance work?

You can buy nonstandard coverage the same way you buy any other car insurance policy. Get a quote, select coverages, limits, deductibles, and a payment plan, and then purchase the policy. Nonstandard car insurance policies are available through agents and brokers. Many companies also sell directly to consumers online or over the phone.

Coverage options for a nonstandard auto insurance policy are the same as for any other. You can get mandatory liability coverage, plus options such as comprehensive and collision. There may be minor restrictions, such as not being able to loan your car to another driver. Your agent or a representative of the insurance company should be able to help you understand what a nonstandard car insurance policy does and doesn’t cover.

If you’re required to file an SR-22 (a common reason to have nonstandard auto insurance), your process will have an added step. An SR-22 is a form your insurance company files with the state to prove that you have insurance. It's often a requirement to get your driver’s license reinstated following a serious traffic violation. 

You'll need to inform the insurance company if you have an SR-22 requirement. And while the company will handle most of the legwork for the filing, you can expect to pay the cost of the filing fee. That's typically $15 to $50, depending on the state.

Where to get nonstandard car insurance 

Many major companies, such as Progressive, Allstate and State Farm, provide nonstandard car insurance, though some sell it through subsidiaries. Other companies do not offer nonstandard car insurance — if you try to get a quote, you won't be able to get coverage. But with a bit of shopping around, you should be able to find an insurer who will sell you a policy.

How much does nonstandard car insurance cost?

It’s difficult to say precisely how much more a nonstandard auto insurance policy costs than a standard one. Insurance premiums often vary significantly between companies and between drivers. The specific reason you’re considered a nonstandard driver will also factor into how much you can expect to pay.

Many insurance experts recommend that you shop around for insurance. Check premiums from at least five companies, including major insurers and nonstandard insurance specialists. You might also consider working with an agent or broker. These professionals typically sell insurance policies from multiple companies. They can quickly help you find the coverage you need at the best possible price.

How to move from nonstandard to standard auto insurance

Nonstandard auto insurance isn’t necessarily a life sentence. Most (though not all) of the reasons you might be placed in the nonstandard category — such as your youth, driving record, credit history, or type of car you drive — can be repaired or will repair themselves over time.

Once again, you might consider discussing your situation with a licensed insurance agent or a representative of your insurance company. They might be able to help you understand why you're categorized as nonstandard and give you some guidance on ways you can eventually move into the standard category. 

One final tip: If you've had nonstandard car insurance for a few years and believe you’ve improved to the point where you deserve to be recategorized as standard, contact your agent or insurance company. The insurer may not recategorize you unless you request it.

You can get the coverage you need

If you're required to have nonstandard car insurance, chances are you're either a very inexperienced driver, you have a few incidents on your driving record, or you drive a car that's out of the ordinary. Nonstandard auto insurance will cost you more. But the good news is that you can get the coverage you need and eventually move from a nonstandard to a standard policy.

Frequently asked questions: Nonstandard auto insurance

Why does my credit history affect my car insurance premium?

Insurance companies in many states look at a driver’s credit history, in addition to factors such as driving history and home address, when calculating their premium. They point to studies showing a correlation between a person’s use of credit and the likelihood of filing an insurance claim. These studies show that the better a person’s credit history, the less likely they are to file a claim.

The use of credit in auto insurance is not without controversy. Critics believe it unfairly penalizes certain minority groups and those with lower incomes. Additionally, some state laws now prohibit insurers from using credit.

What is the assigned risk pool for auto insurance?

The assigned risk pool (sometimes called the “residual market”) refers to insurance for drivers who can’t get coverage from companies' nonstandard programs. These pools are managed by each state. Essentially, they require auto insurance companies operating in the state to take a certain number of assigned risk drivers. Participating companies then work together to share (pool) the overall risk, making this business somewhat more financially viable. 

The assigned risk pool thus ensures all drivers have access to insurance. The premiums for drivers in the assigned risk pool are even more expensive than those for nonstandard auto coverage, so this is something you really don't want unless it’s absolutely necessary.

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