Does Your State Have an "Auto Insurance Plan" for High Risk Drivers?

As most people know, insurance is a way for different people or companies to transfer the risk that they face in every day life to another company or entity. In exchange for this transfer of risk the individual or company will pay a small monthly fee to the company they are purchasing insurance from, called a premium. Insurance companies, seeing as they manage risk, are usually not too excited to insure drivers who have a high risk associated with them. However, the state that an insurer practices in will require them to take on a certain number of these drivers at all times.

According to the AICPCU (American Institute for Chartered Property Casualty Underwriters), an "Automobile Insurance Plan" is defined as a: "Plan for insuring high-risk drivers in which all auto insurers doing business in the state are assigned their proportionate share of such drivers based on the total volume of auto insurance written in the state." This exactly how most states handle high risk drivers of automobiles in their state. You may be asking, why is this the state's problem to resolve?

Our government is responsible for making sure that its citizens have the right to protect themselves as much as possible. The federal government has deferred regulation of insurance to the state level, so your state in which you reside will govern how the insurance companies that practice in it actually practice the craft. The insurance companies you use will then have to insure a certain amount of high risk drivers to guarantee they have access to insurance. Here are a couple of common characteristics of auto insurance plans in different states:

1. People who use the auto insurance plan to gain insurance must show that they have done due diligence to try to get insurance coverage. This is similar to people who apply for unemployment benefits who must show they have been trying to get a job. If no insurance was obtained in the time frame set, usually 60 days or so, then the auto insurance plan comes into effect.

2. Usually people who are getting insured through the auto insurance plan can only get the state required minimum amount of liability insurance coverage. If any amount is offered over this it is usually at a very high cost in premium to the individual getting the coverage.

3. Getting insurance in this market is usually at a major cost to the individual who is obtaining the coverage. Rates are much higher than they are in the regular market, and for good reason, the drivers are a much bigger risk to cause accidents.