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Lesson 2: Auto InsuranceThe High Risk DriverLastly, there is the issue of mandatory auto insurance and the high risk driver. Virtually all states have some form of mandatory auto insurance law. This means that as a condition of receiving and maintaining a drivers license the individual must show proof of having at least the minimum legally required limits of auto liability insurance. No insurance, no license. Admittedly, the law is difficult to adequately enforce, but the penalty for violation is high. So what does this mean for the driver who through bad choices or bad luck has too many tickets and accidents and is being cancelled by his or her insurance company? The answer is that "high risk"(insurance jargon:non-standard)auto insurance is much like any other insurance. There are various companies marketing it with varying prices and varying limits of insurance. Virtually all states have some form of "pool" which will insure high risk drivers. All auto insurance companies licensed in the state are required by state law to participate in the "pool" and to insure their share of high risk drivers. However, as you can imagine, the cost for insurance through the pool is high and generally higher than that charged by those companies which specialize in high risk auto insurance. If you become a high risk driver, you should probably seek out those insurance agencies specializing in high risk auto insurance. And don't try to fool your insurance agent by understating your tickets or accidents. The agent will secure an official copy of your driving record (insurance jargon:MVR) and will know the truth anyway. The cost for your auto insurance will depend on your age and how bad your record is. The good news is that violations and accidents don't stay on your record forever and most insurance companies don't look beyond the last three years. So if your driving record improves, you should be able to get back into the standard insurance market fairly soon and thereby substantially lower your costs. |
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