Why having continuous coverage helps keep you out of high-risk insurance companies
Having continuous coverage on your car insurance is very important. A 35-year-old driver could have a problem when getting insurance again if he lets his policy lapse.
He may have a spotless driving record, but if he hasn’t driven for a couple years the insurance company will view him with suspicion when he gets a new policy – almost like a first-time driver.
So what’s the problem?
The Importance of Continuous Coverage
Continuous coverage is one of the most important things insurance companies look at when considering a new policyholder. Regardless of past history, if you’re unable to document at least six months of past insurance coverage it’s enough to disqualify you from a standard auto insurance company. In such cases a high-risk company is often the only alternative.
(Exceptions can be made for spouses and children of existing policyholders.)
That’s why keeping continuous coverage makes sense so that you avoid the ‘first-time car insurance pitfall’. This can be accomplished even when one doesn’t own a car through a non-owned auto insurance policy. This type of auto insurance policy insures the driver rather than a vehicle. Since there’s no car involved, non-owned policies are liability-only.
Continuous Coverage or High-Risk Insurance
But what if you don’t keep continuous coverage and you can’t get standard auto insurance. A high-risk company is probably your next step. A high-risk insurance company specializes in drivers who have a spotty driving history or who can’t document previous coverage. As a result premiums with these companies are higher than comparable policies with standard companies.
The good news is first-time car insurance policyholders with good driving records only stay with the high-risk company for a short time. Most standard companies will take new drivers after they spend six months in a high-risk company without incident. Unless there’s a ticket, accident or claim during that period, it’s rarely necessary for a new driver to stay in a high-risk company longer than that.
Non-owned policies are often available in high-risk companies. If you don’t have a car, but plan to get one soon, getting a non-owned policy can be a cost-effective way to establish that all-important insurance history sooner rather than later.
Moving from High-Risk to Standard Coverage
Most property and casualty insurance carriers have a high-risk subsidiary. When a driver becomes eligible to move over to the standard company it’s usually a seamless process. The company simply transfers the driver’s information. Proof of prior insurance is already there.
If a driver wants to change companies, they must provide proof of coverage to the new company. An insurance liability card or policy declaration page documenting six months of continuous coverage will do the trick.
Even so, it’s the driver’s responsibility to initiate the process. Otherwise he or she may simply be renewed in the high-risk company, paying more than necessary.
Bottom line, keep continuous coverage on your car insurance whenever possible. If you’re not going to be driving for awhile, get a non-owned policy to maintain coverage and avoid high-risk insurance.
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