Your Guide to Guaranteed Auto Insurance
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UPDATED: May 21, 2019
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Guaranteed auto insurance is insurance that is promised to those who cannot otherwise find car insurance. Guaranteed insurance is meant for high-risk drivers because many insurance companies choose not to insure drivers with a bad driving history.
This type of auto insurance is helpful for those who are struggling to find insurance otherwise, but it is not the best choice for everyone.
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One of the main reasons guaranteed auto insurance is offered is because of the state requirements for car insurance. This also means that insurance companies can charge you more for insurance, and guaranteed coverage is no exception.
In fact, guaranteed car insurance is the most expensive coverage available and it is quite restrictive.
State Requirements for Car Insurance
In the past years, most states have set out requirements in regards to car insurance. In fact, 49 states now require all drivers to carry some amount of car insurance or else they can’t drive.
One of the reasons that somebody may need guaranteed insurance is because they have been caught driving illegally without insurance.
Although the majority of the states require drivers to carry insurance, the types and amounts vary according to each state. The National Association of Insurance Commissioners can help you figure out the specific requirements in your area.
Some of the requisites are very minimal and wouldn’t cover very much if you were in an accident, which is why many drivers choose to purchase additional coverage.
Types of Drivers that Need Guaranteed Auto Insurance
Guaranteed car insurance is not for every driver. It should only be chosen in extreme circumstances in which you are unable to find insurance through any other avenue.
The types of drivers who usually take advantage of guaranteed insurance are those who are considered to be high-risk motorists.
High risk translates into a higher chance of getting into accidents and filing multiple claims.
New and young drivers are considered to be high-risk drivers because of their lack of driving experience. The Insurance Institute reports that young drivers also get in more accidents when there are passengers in the vehicle.
Usually teen drivers are able to get traditional insurance coverage, especially if they are added to their parents’ policy, but there is a slight chance they will need to have guaranteed coverage for awhile.
If you have been the cause of multiple accidents, especially over a short amount of time, and there was extensive damage, you may be considered to be high risk and need guaranteed insurance.
According to the National Highway Traffic Safety Administration, Impaired one person dies every 51 minutes as a result of drunk driving.
Being convicted of driving under the influence will automatically place you in the high risk category, even if there wasn’t an accident involved, which means you may need to seek out guaranteed insurance coverage.
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Guaranteed Auto Insurance Coverage
Most drivers have options when it comes to car insurance, such as whether to purchase comprehensive or collision coverage, or extras such as roadside assistance or rental car coverage. They can also choose the deductible amount and maximum limits that the insurance will cover.
Drivers who have been denied coverage from multiple insurance companies do not have the same options as traditional drivers.
Because of the requirements of each state, insurance has to be made available to drivers who have a license, which is where guaranteed coverage comes in.
Most policies that are guaranteed do not allow the insured to decide how much and what kind of coverage to have. Many guaranteed insurance policies will allow you to buy what is required by your state as well as a basic collision and comprehensive policy, but nothing additional.
The maximum limits for a guaranteed policy are also much lower than for regular policies, so you really do end up with the bare minimum for coverage.
Cost of Guaranteed Auto Insurance
Guaranteed auto insurance is very expensive. Because guaranteed policies are given to drivers who are high risk, the companies writing the policies are taking a big risk as well.
The chances of you getting in an accident and costing the company money are higher than for regular drivers. In order to help cover their possible losses, the insurance companies charge you more for the coverage.
Keep in mind that, not only are you paying more for your monthly policy, if you do happen to cause an accident your own expense for the damages will be high as well.
This is because you are responsible for any additional costs after the insurance benefit runs out. If there is any other way for you to purchase a car insurance policy, do it–it would be a smarter choice than going with guaranteed car insurance.
Other Insurance for High Risk Drivers
Car insurance is a competitive business. Just because you have been turned down by one insurance company doesn’t mean that you should give up.
It may take a number of inquiries, but you may be able to find a traditional insurance provider who will insure you, even if you are high risk.
According to the Insurance Information Institute, there are a number of reasons why you may have trouble getting insured through traditional insurance companies.
Besides choosing guaranteed auto insurance, the Institute also recommends looking at insurance companies that specialize in high risk drivers.
These high risk companies provide policies for drivers who are considered to be high risk, whether it is because of multiple DUIs, bad driving records, driving high performance vehicles, or any other reason.
If you choose to go with a policy from a company who specializes in policies that are not standard, keep in mind that you will still pay very high premiums.
The benefit of choosing a high risk provider as opposed to a guaranteed policy provider is that you will have more options.
You often will be able to choose a more comprehensive policy that will protect you and your assets more in the event of an accident. This reason alone is enough to consider high risk insurance over guaranteed coverage.
Although these companies specialize in insuring drivers of high risk, there are times that even a high risk provider will turn you down for car insurance. In those instances, your only option may be guaranteed insurance.
How to Avoid Guaranteed Auto Insurance
There is one surefire way to steer clear of having to buy guaranteed car insurance. Having a clean driving record is the easiest and best way to be able to have options when choosing car insurance coverage.
Unfortunately, if you already have a poor driving record, it is probably too late and your options are more limited.
Amount of Time to Have Guaranteed Insurance
The good news is that, if you have to resort to purchasing guaranteed auto insurance, you don’t have to necessarily carry it forever. As time goes by, you are less affected by your past driving history.
If you focus on driving carefully and safely, you will be able to have more control over your car insurance options.
The negative effect of your driving history declines with time. If you keep a clean record going forward, you will notice a positive outcome for future insurance needs.
If your driving record is poor because of accidents and/or tickets for driving violations, it usually takes about three years for your record to be cleared and then you can basically start over.
Even though it may take three years for your violations and points to disappear from your license, you should still notice a decrease in your premiums from year to year.
Eventually, you should hope to be able to ditch the restrictive guaranteed insurance coverage and switch to a traditional insurance company that gives you more options and cheaper premiums.
With major violations such as DUIs, they stay on your record for longer periods of time. In some states, they stay on your driving history for seven years, and in other states a DUI stays on your record forever.
You can check with your state’s insurance department to see what the policy is where you live.
How to Find Guaranteed Auto Insurance
There are a couple of ways to find guaranteed insurance coverage. You can do an Internet search as you would for traditional auto insurance. This would mean doing a general search for guaranteed car insurance and filling in the requested information.
The best way to search for and find guaranteed insurance is through your state. The majority of guaranteed policies are assigned through the state insurance department, and insurance companies go through each state to offer their guaranteed coverage.
The good thing about going through state channels is that you have to be accepted for the insurance and cannot be turned down. Contact the insurance department in your state and ask for the assigned insurance risk pool and you will be directed as how to proceed.
Know that you will pay substantially more for the coverage but that you will be guaranteed insurance to satisfy your state’s laws.
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