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What is an Assigned Risk in Car Insurance?

Assigned risk is a type of automobile insurance plan designed to help high-risk drivers get automobile insurance coverage to put them in compliance with their state’s automobile insurance requirements. Companies who wish to sell insurance in a state will be assigned these high-risk cases. High-risk drivers applying for coverage in a state will be assigned to one of these participating companies. This, in essence, has insurance providers sharing the risks involved in covering these high-risk drivers while facilitating coverage for drivers with a high-risk history.

Assigned Risk Briefly Explained

Since all states have some form of auto insurance or financial responsibility requirements to operate a vehicle legally, provisions had to be made for higher risk drivers to comply with these regulations. Assigned risk is the solution. When a high-risk driver applies for insurance in a state and doesn’t qualify for standard insurance rates, they will be “assigned” to an insurance provider licensed to sell auto insurance in the state.

Typically, drivers who have accumulated a large amount of points on their driving records, have been involved in multiple accidents or have received a DUI are considered high risk. Assigned risk policies can be expensive so drivers can benefit from qualifying for standard automobile insurance coverage.

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Categories: Auto Insurance