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When seeking auto insurance, drivers are assessed according to their risk factor. Some drivers ultimately end up purchasing an assigned risk auto insurance policy, but there are some benefits to be had in this situation.
By entering your ZIP code into the FREE quote tool on this page, you will be on your way to saving a bundle on your car insurance!Being in charge of an automobile is a huge responsibility.
Awareness of your surroundings and being as safe a driver as possible is paramount to avoid being involved in an accident.
However, sometimes drivers are only able to obtain auto insurance through an assigned risk policy. While that may sound daunting, it could help you later on.
Assigned Risk Auto Insurance Policies are Controlled by the State
Every licensed driver in the country is required by law to carry auto insurance on the vehicle they are driving. Nevertheless, just because you are a licensed driver does not always mean that you can obtain auto insurance.
Insurance agencies have the right to deny auto insurance coverage to any driver who has been deemed as an undesirable driver.
A person can be considered too high of a risk to be insured if they have excessive traffic violations, speeding tickets, or a long list of auto accidents. Insurance agencies simply do not want to offer coverage for what they would consider an unsafe or careless driver.
This type of driver is simply too risky to take on. A sure way to land yourself in the high-risk category is to be convicted of driving under the influence (DUI). J.D. Power states that a DUI goes beyond just raising your premiums.
It can lead to your insurance company labeling you as too high of a risk and terminating your auto insurance policy altogether.
Usually a motorist is considered an assigned risk by the Department of Motor Vehicles (DMV) in the state in which they reside.
The DMV is responsible for actually assigning that high-risk driver to an auto insurance agency to obtain an auto insurance policy.
High-Risk Drivers Still Need Insurance
It is a bit of a catch-22 scenario. All drivers are required by law to carry insurance, but the law does not guarantee that all drivers will be able to obtain an insurance policy.
Even if you are considered a good driver, you could be an assigned risk because of other factors such as belonging to a high-risk group such as teenage drivers or because of the neighborhood in which you live where there is a high rate of auto theft.
But a driver, whether considered a good driver or a bad driver, is still just a driver and required to carry auto insurance.
Most states across the United States have some type of assigned risk auto insurance that is provided to high-risk drivers. They all have similarities but check with your local DMV to find out more details about your state’s particular policies.
Insurance companies know that they are practically guaranteed to lose money on an assigned risk auto policy due to the nature of the policy itself.
A driver who is considered to be that high of a risk is not a healthy addition to their clientele, which is why that type of assigned risk policy must be assigned to that particular driver.
A high-risk driver is more likely to file a claim with their insurance carrier that will cost the insurance agency money.
Your Insurance Agent Does the Paperwork Making You an Assigned Risk
In order to become an assigned risk, you must apply for auto insurance at least three times to three different auto insurance agencies.
After each of them has refused to offer you coverage, the third one should complete a standard form that is sent to the state government.
This form will state that you have been deemed to belong to a high-risk category and are in need of an assigned risk auto insurance policy.
Obtaining auto insurance through an assigned risk auto insurance agency is not a bad thing.
That type of agency is simply an auto agency that offers the same type of auto insurance as any other carrier, but they are considered the last resort for high-risk drivers who cannot get insured by any other means.
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Assigned Risk Auto Insurance Does Not Last Forever
Just because you happen to land in the high-risk category of assigned risk auto insurance does not mean that you will stay in that category forever.
If you can maintain a clean driving record which is absent of any traffic violations and tickets as well as avoiding being involved in accidents for at least three consecutive years, you can apply for auto insurance through another carrier and request a lower rate.
Your assigned risk is what determines your insurance rates. So the better your driving record is, the lower your premiums are likely to be.
Another way to help lower your auto insurance rates and make it easier to purchase an insurance policy is to have a decent credit score. Your credit score reflects your responsibility in paying your bills on time.
You can get a free copy of your credit score at AnnualCreditReport.com.
Every auto insurance carrier has their own set of requirements when deciding which drivers they will offer coverage to and which ones they will refuse.
Be diligent in your search and shop around for different policies and eventually you may find one that will not label you as an assigned risk auto insurance policyholder.
Remember, some auto insurance agencies review the last three years of your driving record while others may be required to review the last five years.
An Assigned Risk Insurance Policy has Some Benefits
Since all drivers are required to carry auto coverage of some type, one benefit of having an assigned auto insurance policy is simply that you are at least carrying some type of coverage. This makes it legal for you to be on the road.
Having an assigned risk auto insurance policy is better than not having any type of insurance policy at all. Sometimes having an assigned risk auto insurance policy is the only type of policy that a high-risk driver can get.
An assigned risk insurance policy will often only offer the absolute minimum coverage to the driver in order to be considered legal. This is a benefit because you do not have to worry about having a myriad of non-essential items on your policy that you do not require and do not want.
An assigned risk auto insurance policy offers you and your vehicle insurance coverage. The premiums may be higher than you would like them to be, but that can all come out in the wash later on.
Pay your monthly premiums on time and stay out of trouble, and this will be reflected on your driving record.
By purchasing and maintaining an assigned risk auto insurance policy, you can always change insurance carriers later on and end up paying much lower premiums than before.
The Insurance Information Institute (III) issued a press release that offers more insight as to why auto insurance rates vary so much from one driver to another.
Each agency wants to widen their customer base, so they have developed their own set of requirements for their policyholders. This can help tremendously when a high-risk driver is searching for an auto policy.
Just because one insurance agency denies you does not mean that another one will.
Driving Without Insurance is Not an Option
Many high-risk drivers try to get away with not having auto insurance because they have difficulty finding a policy that will cover them or they do not want to pay such high premiums.
The DMV knows this, and it has developed a system that tracks those drivers who may be on the road illegally due to being uninsured.
The Insurance Information and Enforcement System was designed to track all insurance policy cancellations. So if you purchase a policy and then cancel it soon after registering your vehicle, the DMV is notified of those actions.
For example, New York State utilizes this system to help ensure that all uninsured drivers are restricted from driving in that state in the hopes of decreasing the number of accidents that could end up costing all those involved thousands of dollars.
For drivers who are toying with the idea of purchasing a high-risk insurance policy and then canceling it afterward because the premiums are too high, you may want to rethink that thought.
It is better to pay higher premiums for an assigned risk auto policy than to drive without insurance at all.
This is because it could lead to an enormous amount of debt if you are involved in an accident or the loss of your driver’s license if you are caught driving while uninsured.
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