What is an assigned risk policy in regards to auto insurance?

Answer

If you need one of these it is for two reasons.

1 your state requires you to have auto insurance 2 you can’t get auto insurance (most likely because you keep running into things)

If you are unable to get auto insurance after attempting to do so with a set number of companies then the state will “assign the risk.” Each insurance company will have a department that will handle this type of policy. This policy will always loose money for the insurance company just because of the nature of what this policy is. This is why the policy had to be assigned to the company.

Normally, the number of policies that the company will have to handle is based directly on the proportional percentage of policies the company rights in the state. So if the insurance company writes 35% of the auto policies in the state they will have to write 35% of the assigned risk policies also. This keeps it fair for all insurance companies since they will all have their fair share of losses for this type of risk.

An assigned risk policy will also usually not benefit from the same level of customer service other policyholders would. For instance, if a company offers 24 hour a day customer service you may only get a 9 to 5 window to call and your wait time will be much longer than for the voluntary book of business. In short, you aren’t going to go somewhere else because of poor service since you have no choice. These policies also don’t typically have the same coverage options as a regular auto policy. Most times it only offers the minimum mandated coverages. This is all done to keep costs at a minimum for the company so they can cut their losses as much as possible.

First answer by ID1197813832. Last edit by ID1197813832. Question popularity: 25 [recommend question]