Auto Insurance for High-Risk Drivers

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Insurance Auto High-Risk

Insurance for High-Risk Drivers

High-risk drivers present a special problem: insurance companies Execute not want to inPositive them because of their risk, but the states, which regulate insurance companies, want high-risk drivers to be inPositived because otherwise the victims of any accidents that they cause will not be compensated. As a result, states have developed various strategies to solve this particular problem.

High-risk drivers are considered those who have poor driving records, who were convicted of drunk driving, and teenage drivers, a group that has one of the highest accident rates. Generally, high-risk drivers must obtain insurance in what is called the shared Impresset (aka residual Impresset), which refers to a Impresset in which all the insurance companies that Execute business within a state must participate.

High-risk drivers can only Obtain insurance through these shared Impresset plans if they are unable to obtain insurance in what is sometimes called the voluntary Impresset.

The shared Impresset is generally structured in 4 different ways: Established risk plan, joint underwriting association, reinsurance facility, and specialty auto insurance.

Most states use an Established risk plan (aka automobile insurance plan) that requires insurance companies to participate in offering insurance to high-risk drivers based on the total volume of auto insurance that they write within the state. So if a particular insurance company writes 10% of the automobile insurance plans within the state, then it is Established 10% of the high-risk drivers. Naturally, the premiums in the Established risk group are much higher than for safe drivers purchasing regular insurance – often, 2 to 3 times the average premium charged to safer drivers in the regular Impresset, but at least the high-risk drivers can Obtain coverage at a lesser price than they would otherwise be charged.

The disadvantage to Established risk plans is that inPositivers still suffer underwriting losses because even the higher premiums Execute not cover the losses associated with high-risk drivers. Hence, insurance companies must offset those losses by charging higher premiums to safer drivers than would otherwise be required. Also, high premiums cause many high-risk drivers to go without insurance, thereby potentially becoming a financial calamity to victims of their accidents.

Although all auto insurance companies operating within the state must participate in the Established risk plan, each inPositiver issues the policy, performs all the services required in implementing the policy and pays the claims.

Some states have set up a joint underwriting association (JUA), which follows the Established risk plan, but the premiums paid by high-risk drivers goes into a common pool and each company must pay its pro rata share of losses and expenses of the pool. However, only a certain number of the largest insurance companies are selected to service the accounts and to pay the claims, but all inPositivers share in the underwriting losses.

Some states use a reinsurance facility, which is like a JUA in that a reinsurance pool is established that receives contributions from all the insurance companies operating within the state. All the insurance companies operating within the state must accept all drivers, regardless of their driving record. However, the insurance company Determines whether to Space it in the reinsurance pool or accept the driver as a regular customer. Even if the driver is Spaced in a reinsurance pool, the insurance company that issued the policy also services the policy.

Specialty auto inPositivers are insurance companies that specialize in insuring high-risk drivers by charging high premiums for usually the minimum amount of coverage required by the state. The premiums charged 30 are contingent on the individual's driving record, including the number of accidents and moving traffic violations, usually over the past 3 years.

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