What is Assigned Risk Auto Insurance? When Do You Need It?

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Leslie Kasperowicz
14 Years in the Insurance Industry (CSR & Writer)https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/4autoins-live/6ea5d860-leslie-kasperowicz.jpg

UPDATED: Mar 13, 2020

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Assigned risk auto insurance is a unique type of car insurance given to drivers who would not normally qualify for insurance but are required to have insurance under state law.

Keep reading to discover everything you need to know about assigned risk auto insurance, including when you need it and how to get it.

How Does Assigned Risk Auto Insurance Work?

assigned risk auto insurance explainedCertain drivers are riskier to insure than other drivers. A driver with a history of multiple DUIs and speeding tickets, for example, is much riskier to insure than a driver with a clean record.

Typically, a driver with a bad record can still get car insurance from any major insurance company – they’re just required to pay higher premiums than drivers with a safer record.

Some drivers, however, are so risky to insure that car insurance companies will refuse to do business with them. Someone with 4 DUIs and multiple citations for driving without insurance, for example, may be refused by most major car insurance companies.

High-risk drivers are undesirable to insurance companies. These drivers may not be able to purchase car insurance through regular means. That’s where a state’s assigned risk program kicks into action.

Several states in America have assigned risk systems. These states assign high-risk drivers to major insurance companies.

In New York, for example, the Motor Vehicle Accident Indemnity Company (MVAIC) may assign high-risk drivers to different insurance companies. This is the same organization that covers damages inflicted by uninsured and underinsured motorists.

Make sure you compare quotes from as many car insurance companies as possible before you look at assigned risk car insurance. Some companies specialize in high-risk car insurance. You’ll pay higher rates, but you can avoid using assigned risk car insurance.

You May Require Assigned Risk Car Insurance Even With a Clean Driving Record

Surprisingly, some drivers in the United States are required to have assigned risk car insurance even when they have a clean driving record.

Some young male drivers, for example, are considered very risky to insure because they have the highest accident rate of any demographic. If you’re a 17-year old male driver with one accident – or even no accidents – on your record, then you may be required to get assigned risk car insurance.

In other cases, drivers who live in an area with a lot of claims are required to obtain assigned risk car insurance. If you live in the roughest part of your city, for example, where there are lots of break-ins and vehicle thefts, then you may be required to obtain assigned risk car insurance.

How to Get Assigned Risk Car Insurance

Generally, the best way to get assigned risk car insurance is to talk to an insurance agent. If at least three car insurance companies have turned you down, then the insurance agent can file a form to your state’s insurance department. The form claims you are a high-risk driver who needs assigned risk car insurance.

Alternatively, you may wish to contact your state’s assigned-risk organization directly. Drivers in New York, for example, may wish to contact the Motor Vehicle Accident Indemnity Company (MVAIC) and ask for assistance finding an insurance company.

Rules for assigned risk car insurance can vary widely between drivers. That’s why it’s often best to contact your state’s insurance department directly or work with an insurance agent who can walk you through the process of obtaining assigned risk coverage.

What to Expect with Assigned Risk Car Insurance

How does assigned risk car insurance work? Is it just like ordinary car insurance?

If you fall into the assigned risk category, then you will be limited to buying the minimum amount of coverage required by state law.

You will also pay much higher premiums than you would normally pay for the bare minimum amount of car insurance.

The bare minimum amount of car insurance will typically cover property damage liability and bodily injury liability. That means your car insurance will cover the medical expenses and vehicle repair expenses of other drivers on the road, but it will not cover your own medical expenses or damage to your own vehicle.

If the other driver was at fault for the accident, then the other driver’s car insurance may cover your medical expenses and vehicle repair costs.

How Long Do I Need to Hold Assigned Risk Car Insurance?

As your driving record improves, and you maintain a clean driving history, you should eventually be able to move out of the assigned risk car insurance pool.

Generally, if you keep a clean driving record for at least three years and have paid your premiums on time, then you will be able to move out of the assigned risk car insurance pool. At this point, you will be able to get normal car insurance.

If you currently have assigned risk car insurance, then we recommend comparing quotes online frequently. The sooner you move away from assigned risk car insurance, the better.

Conclusion: Assigned Risk Car Insurance is a Last Resort When No Other Company Will Insure You

Ultimately, assigned risk car insurance is a last resort for drivers in the highest risk class. If no car insurance company will insure you, and you keep getting denied for car insurance, then assigned risk car insurance may be your only option.

Talk to an insurance agent or contact your state’s assigned risk car insurance department to obtain assigned risk car insurance coverage.

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