Assigned risk pool program vs. a non-standard
Many private companies will evaluate the risk of covering a particular driver (and his/her vehicle) against the potential of paying out a claim.
If the insurer determines that the risk is too high, they may deny coverage. This often results in a group of people called high-risk drivers. High-risk drivers include teenagers, persons with poor driving records, or those convicted of a DUI. If you own a very expensive vehicle or live in area where claims are regularly made, you may also fall into a high-risk driver pool.
There are two common options available for high-risk drivers: assigned risk pools and non-standard insurance coverage.
What is an assigned risk pool?
An assigned risk pool is a type of coverage designed for motorists who can’t get insurance through regular companies. A risk pool works by having multiple insurance companies pay into a special pool of funds, which can then be used to provide coverage to high-risk drivers.
Each state mandates the creation of an assigned risk pool that gives drivers an alternative option for coverage. By having many different insurers paying into a common pool, the level of risk is spread out and high-risk drivers can receive adequate coverage while on the road.
Non standard insurance companies
The other option available to high-risk drivers is non-standard coverage. Non-standard companies are basically small insurance companies that provide special policies for high-risk drivers.
Despite having a poor driving record, multiple claims, or DUI convictions, non-standard companies may still extend coverage to such drivers. These companies will balance both low risk and high-risk policy holders to ensure that they don’t have to pay more in claims than what they generate in premiums.
Benefits of an assigned risk pool
In most cases, assigned risk pools are a better option than non-standard coverage. This is because the pool is run by your state, extending better coverage limits to high-risk drivers. Assigned pools are also more available and accessible than non-standard policies. You may even be able to save more in premiums by obtaining coverage from state-monitored pools.