Assigned Risk Statutes

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What is Assigned Risk?

"Assigned risk" is a term that insurance companies use to label certain people.  Individuals who fall within the assigned risk category are those who cannot obtain insurance from an insurance provider in the traditional process for one reason or another.  Because insurance coverage is largely determined on the risk a policy holder has, insurance companies are very careful in who can get coverage and for what.  Common reasons for not being able to obtain insurance coverage include:

What are Assigned Risk Statutes?

Some people are classified as assigned risk clients by insurance companies and therefore unable to get insurance through traditional means.  A few states believe everyone should have access to insurance, so the state's legislature created laws making it possible for assigned risk individuals to still get insurance coverage.  They are called Assigned Risk Statutes.  States that have adopted such laws include:

How do Assigned Risk Statutes Work?

The first step in an Assigned Risk Statute is the creation of an Assigned Risk Plan.  Each insurance company that operates in the state must subscribe to and follow the plan.  Some kind of government body administers the plan.  Each state is different, however.  Some states use an insurance superintendent or commissioner, or an administrative agency to oversee an assigned risk person's attempt to get insurance coverage.  Usually, a person who is trying to get insurance coverage but is classified as assigned risk will have to exhaust all efforts to get insurance before turning to the appropriate plan administrator.

After an assigned risk individual goes through the administrative and Assigned Risk Plan process, and depending on the state, there are generally two options available to them:

  1. Accept coverage from an assigned insurance provider.  These insurance providers usually work in close proximity to, and sometimes act like a government agency.
  2. Accept insurance coverage from a private insurance provider that would have otherwise denied coverage.  Because the insurance provider would have denied coverage had it been up to them, the assigned risk individual will usually have to pay higher premiums than a normal customer, even though the state government has required that the insurance provider grant a policy.

Just because an insurance company has to follow an Assigned Risk Plan, it does not mean that they cannot deny coverage to anyone.  Insurance companies still have the ability to object over issuing a policy to someone who comes to them by way of an Assigned Risk Plan.  An example of the acceptable use of an insurance company's objection is denying insurance for a convicted arsonist.

Do I Need an Attorney to Handle My Assigned Risk Issue?

If you are being denied insurance coverage and have been classified as an assigned risk by insurance companies, you may still be able to obtain insurance coverage because of Assigned Risk Statutes.  It is recommended that you contact an insurance attorney to discuss your problem and determine if you can get an insurance policy.  Only an attorney will be able to explain the issues, guide you through the process, and help defend your rights.

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Last Modified: 11-22-2011 04:33 PM PST

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