Assigned risk


Assigned risk

Assigned risk means a driver of a motor vehicle, or a class of such drivers, who would be denied insurance coverage by insurance companies, but are required to be covered under U.S. state law. [See [http://www.thefreedictionary.com/assigned+risk Free Dictionary] , citing the American Heritage Society dictionary.] The term "assigned risk" is also used in Workers' compensation law.

Motor vehicle insurance

The state government, usually the Department of Motor Vehicles, assigns the risky motorists to automobile insurance companies. [Ballentine's Law Dictionary, at 36.]

The risky drivers are undesirable for some reason, and can not purchase insurance through conventional means. [See the Rupp's definition on the CCH website: [http://insurance.cch.com/RUPPS/assigned-risk.htm] ] They are considered high-risk because of numerous speeding or other traffic tickets, or a recent history of motor vehicle accidents, or in states that have a point system, accumulation of so many points. The state DMV point system may be different from the insurance companies' point system. [Under N.Y. Law, a driver can be suspended after accumulating 11 points in 18 months: [http://www.nysdmv.com/license.htm#points] ]

Several states in the U.S. have such assigned risk systems. [For example, New York, see article text, California: [http://www.aipso.com/ca/] and Minnesota: [http://www.house.leg.state.mn.us/fiscal/files/ibasgrsk.pdf] ] New York is a typical system. [N.Y. Insurance Law, Article 52; to locate the law online, search under "Bill search and Legislative materials" at [http://assembly.state.ny.us/leg/] under INC, article 52.] The MVAIC, or Motor Vehicle Accident Indemnity Company, may assign high-risk drivers, and pays for victims of uninsured or underinsured motorists. [MVAIC web site: [http://www.mvaic.com] ] Uninsured means the driver or owner of a motor vehicle has no insurance at all, while an underinsured person has insurance, but the coverage is insignificant compared to the potential damages accrued from a tort lawsuit. Please refer to the MVAIC web site for information on how to file a notice of claim in N.Y., [Notice of intent: [http://www.mvaic.com/noi.pdf] ] as well as forms. [MVAIC forms: [http://www.mvaic.com/forms.htm] ]

Workers' Compensation

Assigned Risk systems are also used for Workers' Compensation, whereby businesses who have had unsatisfactory loss performance or whose employees perform such hazardous functions that voluntary insurance companies will not insure them, can be assigned to an insurer. Fact|date=August 2007

A common problem with assigned risk is that some states' assigned risk plans only provide coverage for that state, causing businesses whose employees travel to other states to have various issues, including but not limited to the possibility of an uncovered claim from an employee claiming another state's benefits. If unable to secure a voluntary policy providing multiple state coverage, it is always possible to purchase a separate state's Worker's Compensation fund or NCIC assigned risk to fill the coverage gap, but this can be unfairly cost inefficient as some payroll is inevitably rated for in more than one policy - causing the premium to be much higher than if a voluntary coverage had been obtained. Fact|date=August 2007

This is especially an issue for Truckers or Contractors whose rates are already high and for whom it can be very difficult to obtain voluntary coverage due to the nature of their work. Fact|date=August 2007

References

See also

* Insurance
* Insurance companies
* Motor vehicle
* Surety
* Underinsured
* Workers' compensation

External sources

* [http://www.libertymutual.com Liberty Mutual Insurance Co]
* [http://www.aipso.com AIPSO]
* [http://www.ncci.com National Council on Compensation Insurance]
* [http://www.assignedriskauto.org]


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • assigned risk — n: a poor risk (as an accident prone driver) that insurance companies would normally reject but are forced to insure by state law Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. assigned risk …   Law dictionary

  • assigned risk — UK US noun [C] US ► INSURANCE a person who is refused insurance because of their previous record and must buy insurance from particular insurance companies who can charge them more money: assigned risk insurance/plan »State insurance regulations… …   Financial and business terms

  • assigned risk — noun : a risk that qualified underwriters of workmen s compensation or automobile liability insurance would reject under applicable standards but accept so as to permit compliance with state law, the insurance being handled through a pool of… …   Useful english dictionary

  • assigned risk — As relating to motor vehicles nuisance, a risk which is not ordinarily acceptable to insurers but for which coverage is required by state statute and which is, therefore, assigned to insurers participating in an assigned risk pool …   Black's law dictionary

  • assigned risk — As relating to motor vehicles nuisance, a risk which is not ordinarily acceptable to insurers but for which coverage is required by state statute and which is, therefore, assigned to insurers participating in an assigned risk pool …   Black's law dictionary

  • assigned risk — Insurance. a risk that, under state law, is assigned to an insurer from a pool of insurers who would not otherwise accept it. [1945 50] * * * …   Universalium

  • assigned risk — noun Date: 1946 a poor risk (as an accident prone motorist) that insurance companies would normally reject but are forced to insure by state law …   New Collegiate Dictionary

  • assigned risk plan — An insurance plan created and imposed by state statute under which persons who normally would be denied insurance coverage as bad risks are permitted to purchase insurance from a pool of insurers who must offer coverage to such individuals.… …   Law dictionary

  • assigned risk plan — In those states having compulsory motor vehicle insurance laws (i.e. financial responsibility laws), such statutes provide that persons who are otherwise unable to buy coverage (because of, e.g., poor driving records) may secure insurance through …   Black's law dictionary

  • assigned risk plan — In those states having compulsory motor vehicle insurance laws (i.e. financial responsibility laws), such statutes provide that persons who are otherwise unable to buy coverage (because of, e.g., poor driving records) may secure insurance through …   Black's law dictionary