In most states, vehicle insurance is mandatory. Each state sets minimum purchase requirements for bodily injury and property damage liability, and insurance companies set eligibility requirements. Insurance companies place heavy emphasis on your driving record when determining eligibility and can deny or cancel a policy based on their findings. If this happens, your only option is to purchase assigned risk insurance.
Identification
It is always possible to get vehicle insurance. Drivers receiving a denial of insurance due to excessive violations or accidents can buy it through an assigned-risk pool. This insurance also goes by the terms "residual" and "shared" market. When you purchase insurance in this way, you do not choose your insurance company. After filling out an application, your state insurance department chooses a company to provide coverage. According to the Insurance Information Institute, every insurance company in the state must participate in the assigned risk pool. A company's number of assigned risk policies depends on the amount of "regular" insurance it sells.
History
Before vehicle liability insurance became for the most part, mandatory, insurance companies could refuse insurance to anyone not meeting eligibility requirements. This left no options for those drivers denied insurance, according to the Automobile Insurance Plan Service Office. When liability insurance, or insurance that covers personal injury and property damage, became increasingly mandatory, financial responsibility laws also went into effect. Financial responsibility laws required drivers to lose driving privileges if they caused an accident, did not have liability insurance and could not pay associated costs out of pocket. The insurance industry came up with the idea for assigned risk insurance as a way to make sure every driver could purchase coverage.
Availability
Assigned risk insurance is available for any type of vehicle. In addition to cars and trucks, this includes motorcycles, snowmobiles, all-terrain vehicles, campers, motor homes and golf carts. Options do not regulate coverage to the minimum liability limits set by your state. In addition to differing amounts of liability coverage, collision and comprehensive coverage also are available.
Eligibility
While each state determines specific eligibility requirements for getting assigned risk insurance, general requirements apply to most. Usually, you must first try to get "traditional" insurance. If one or more insurance companies deny your application, or accept the application at a rate higher than you would pay for assigned risk insurance, you can take out an assigned risk policy. Most states require you to apply within 60 days of receiving a denial of coverage.
Time Frame
According to Assigned Risk Insurance, the average time you remain on an assigned risk insurance policy is three years. Assigned Risk recommends that to reinstate eligibility for traditional insurance in a time frame earlier than three years, you "clean up" your diving record, get your finances in order and consider taking a defensive driving course. You have the option at any time to shop around and get traditional insurance if you qualify.
Member Comments