Assigned risk is the insurance of last resort for drivers who can not otherwise find an insurance company to issue a policy. Typically, a driver becomes an assigned risk after an excessive number of accidents within a short time frame.
Each assigned risk state mandates that insurance companies doing business within its boundaries participate in that state’s assigned risk pool. That means they must cover a number of the assigned risk drivers based on the amount of business that the carrier does within the state.
For example, an insurance company that does 15 percent of the business within a state must accept 15 percent of that state’s assigned risk drivers.
By creating an assigned risk program, states which require auto insurance can insure that there will be a way for even the most uninsurable driver to obtain coverage. This effectively reduces the number of uninsured motorists.
For the driver with the poor driving record, the insurance company is compelled to accept you, but with some stipulations. First, they will typically only provide you with the basic minimum coverage. Second, the policy will be higher than standard commercial insurance.
The assigned risk system is simple. When you get turned down repeatedly by insurance companies, your state, or sometimes even an independent insurance agent can give you a form to apply to the assigned risk pool.
Once you are in the assigned risk pool, the carrier who provides you with coverage must keep you as a policyholder for at least three years. During that time, you should put forth endeavors to keep your driving record clean.
You can, however, shop around for better rates with other carriers.
In some cases, rates are determined purely by the extent of your poor driving record. In other cases, more factors go into determining the rates offered.
Keep in mind, that your address may still play a factor in your rates, just as in standard commercial coverage.
By Darryl James