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Let’s Talk High-Risk Insurance. What Is “Non-Standard Coverage?

Say you’ve received a major conviction, or even a criminal conviction, and your auto insurance provider has refused to renew your insurance policy. You’re forced to go elsewhere to find insurance, but you’re having no luck. What’s the next option? Are you doomed to forgo insurance and stop driving altogether (especially as it’s illegal to drive without insurance in the province of Ontario, as well as the rest of Canada?) What’s the solution?

Enter high-risk insurance.

High risk insurance in Ontario referred to as non-standard coverage, is a specialized form of insurance coverage that exists for individuals who may not be eligible for coverage from your run-of-the-mill insurance companies. They have been rejected for any number of reasons, or a

Most Common Reasons Why We Shop for High-Risk Insurance

High-risk insurance is not always purchased because people have committed major criminal convictions. It’s also an option for good drivers whose circumstances are just stacked against them – and homeowners, too. Here are some of the most common reasons why people may be shopping for high-risk insurance options for home or auto.

You’ve made too many claims.

Yes, although your insurance is designed to protect you from losses by paying out “settlements” after a claim has been submitted and approved, making too many claims can signal that you’re too high risk a policyholder and your existing insurer can determine that they can no longer provide you coverage. They may cancel your policy, which will leave a mark on your record.

You have taken out multiple mortgages.

You can get home insurance with a mortgage – actually, the majority of the time, lenders will require you to carry home insurance. But having multiple mortgages can disqualify you from qualifying for standard home insurance, including if you acquire your mortgages from private lenders.

You have multiple major convictions or criminal convictions.

Criminal speeding, racing, traffic convictions, failing to stay at the scene of an accident, driving under the influence of drugs and/or alcohol, speeding in a school zone, etc. are all convictions which can result in you being labelled a high-risk driver. These instances may remain on your driving record for three years or longer, too. With serious convictions, you may only be able to acquire base liability insurance through a high-risk insurance provider.

Your last policy was cancelled because of non-payment.

Non-payment ranks highest for reasons why insurance companies opt to cancel insurance policies. If you avoid paying your premium, and your policy is cancelled, this cancellation essentially behaves as a sort of “black mark” on your record. As a result, you’ll no longer qualify for purchasing standard insurance. This is the case both for home, auto, and other personal insurance products.

You’ve left your home vacant for too long.

A vacant home, by definition, is a home that has been left unoccupied without any intent for anyone to move back in, or a new home where the owners have yet to move in. If your home has been vacant for longer than your insurer “Oks” then you will no longer qualify for insurance under the terms of your existing policy. If you’re planning to leave a home unoccupied for a specific period of time, be sure to check with your broker about terms and potentially acquiring a vacant home policy.

What is High-Risk Insurance?

High-risk insurance is insurance coverage for drivers and individuals who have been labelled high-risk, and therefore cannot purchase standard insurance policies. With high-risk insurance, there is a higher cost – typically surcharges of 20% or more will apply if you’ve had multiple at-fault incidents or convictions on your record – and so the difference can really be substantial for some. You might want to work with a broker to find reasonable rates with high-risk insurance.

In addition, the options you’ll have for payment will be reduced. Sometimes, with standard insurance, you can pay your premiums up-front for the year, monthly, etc., but high-risk insurance may only present you with a single option (or fewer than you’re used to.)

High-risk insurance may also be limited in whatever it covers. Liability limits may be capped at $1,000,000 for both home and auto insurance, you’ll have to pay much higher deductibles (i.e., you’ll have to assume a larger responsibility of the risk) and there will be specific conditions and exclusions placed on your policy that you might not otherwise see with standard insurance.

Also, if you’ve been labelled a high-risk driver, this will impact all other listed drivers and anyone who is living in your household that can operate a motor vehicle legally (has a license.)

How Do I Avoid Being Labelled High-Risk?

For high-risk drivers, know that you aren’t permanently labelled high-risk. This isn’t something that sticks with you for life. It can, however, stick with you for a few years. Most convictions and violations will stay on your driving record for 3-5 years or more, depending on the severity. For homes and individuals, your high-risk label may be removed once you’ve paid off your mortgages and gone a few years being claims—free or making fewer claims.

For drivers, here are some tips to avoid being labelled high-risk:

  • Take a driving course. It’s a good idea if you’re a newer driver or if you’ve racked up a few traffic violations to take a defensive driving course. Some approved courses may even reward you with a discount on your premiums.
  • Follow the rules of the road. Speed can rack up quickly. Pay attention to signs and keep a safe following distance from other vehicles.
  • Never use your phone while driving or drink alcohol/drive under the influence. Drinking and driving is a serious crime, and it can result in the suspension of your license as well as serious injury or even death to yourself and other drivers on the road.
  • Always pay your insurance premiums on time. If you are worried about not being able to make a payment, be sure to update your insurance broker. They may be able to make some accommodations with your provider for the time being.

A broker can help you find high-risk insurance that doesn’t break the bank. Discuss with an advisor for more advice on high-risk insurance as it pertains to your situation.

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