"Assigned risk" is a term that insurance companies use to label certain people. Individuals that 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. Since insurance coverage is largely determined on the risk a policy holder has, insurance companies are very careful in deciding who can get coverage and for what. Common reasons for not being able to obtain insurance coverage include:
- Prior accidents,
- Negative financial situations, and
- Criminal convictions.
What Are Assigned Risk Statutes?
Some people are classified as assigned risk clients by insurance companies. Once they are classified as such, it is nearly impossible for these people to get insurance through traditional means. However, a few states have enacted laws that make it possible for assigned risk individuals to still get insurance coverage. These laws are called Assigned Risk statutes. States that have adopted such laws include:
- New York,
- North Carolina,
- Texas, and
How Do Assigned Risk Statutes Work?
Under an Assigned Risk statute, the state government creates and administers an Assigned Risk Plan, which every insurance company operating in that state must subscribe to and follow. 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:
- Accept coverage from an assigned insurance provider. These insurance providers usually work in close proximity to, and sometimes act like, a government agency.
- Accept insurance coverage from a private insurance provider that would have otherwise denied coverage. Since 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 is required 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 an Assigned Risk Statute. It is recommended that you contact a qualified 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.