What are the Three Tiers of Auto Insurance Coverage?

When a driver applies for auto insurance coverage, he or she will be classified in one of three categories:

  • Substandard
  • Standard
  • Preferred

Customers who are classified as substandard for their auto insurance coverage are considered high risk drivers, and they are charged higher rates for this necessary protection. Someone in this category may have been involved in an accident or accumulated moving violations on his or her record. Being charged with a DUI is another situation where a driver will be placed in a high-risk category.

Standard car insurance customers are considered average and this category reflects the majority of people who apply for coverage. Someone can be placed in this second tier of auto insurance coverage may have been involved in an accident or accumulated some moving violations, but the incident would have occurred a few years before.

Preferred auto insurance customers are those who have exemplary driving records and who are considered very low risk. They also drive vehicles which are classified as low-risk, and anyone who is looking for coverage is asked for the make and model of the vehicle they are driving.

Once drivers are classified into one of the three tiers of auto insurance coverage, their status can be adjusted over time as circumstances change. Substandard drivers who are able to maintain a clean driving record for a number of years may be able to improve their rating to a standard one and a preferred driver who is involved in an accident or accumulates moving violations can be lowered to standard by the insurance company.


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