All insurance--homeowners, life, health, automobile, accident--has just one purpose: to hedge (or protect) the insured against risk. Insurance isn't an asset in the conventional sense; it doesn't have anything tangible that adds aesthetic value to your home; it can't be eaten, pawned or used as furniture. And yet, insurance is one of the most valuable tools in your financial arsenal because it protects you from all the risk you and your valuables are exposed to every day.

It stands to reason, then, that the cost of your insurance is based on the amount of risk you and your lifestyle bring to the table. A person who is 45, has never been in a car accident, drives rarely, and is married brings less risk than a 25-year-old unmarried individual who gets speeding tickets every month and has had several accidents in which he or she was at fault. High risk insurance is there to cover those people who expose the insurer to more risk than what the insurer would consider standard.

High risk insurance assumes an inherent risk that is greater than what average rates are based on, so it carries with it a higher premium. Of course, like with any policy, deductibles and policy limits can be adjusted to make that premium more affordable.