Home Car insurance Driving habits Swimming in the assigned-risk pool for car insurance Swimming in the assigned-risk pool for car insurance View Carriers Please enter valid zip Compare top carriers in your area Written by Michelle Megna Michelle Megna Michelle, the former editorial director, insurance, at QuinStreet, is a writer, editor and expert on car insurance and personal finance. Prior to joining QuinStreet, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News. | Reviewed by Ashlee Tilford Ashlee Tilford Ashlee, a former managing editor, insurance, at QuinStreet, is a journalist and business professional. She earned an MBA in 2014 with a concentration in finance. She has more than 15 years of hands-on experience in the finance industry. | Posted on: March 21, 2010 Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. If you have numerous speeding tickets, traffic violations or a recent history of car accidents, you may be swimming in the high-risk pool for car insurance. Over the years, the auto insurance industry has found ways to absorb most high-risk drivers into its ranks through “nonstandard policies,” where you pay a high premium but secure the liability insurance you must have by law to drive. But there are drivers even the regular car insurance industry can’t help. These drivers can’t buy car insurance in the “voluntary market” because they are first-time drivers or their driving records are peppered with violations. These are folks who are expected to make future car insurance claims and car insurance companies don’t want them. If you’re in that boat, you’ll have to dive into your state’s “assigned-risk pool,” also known as the “residual” or “shared” market. This is where risky drivers can buy car insurance policies at a high price from insurers who must accept them. According to the Insurance Information Institute (III), every auto insurer must accept a number of assigned-risk drivers in proportion to the amount of business it conducts in each state. Residual-market policies may be available for all types of vehicles, including commercial vehicles, motorcycles, motor homes, campers, all-terrain vehicles, snowmobiles and golf carts. Nationwide, assigned risk business made up roughly 0.8 percent of the total written auto premium in 2008, according to a 2009-10 report from AIPSO, which provides services for insurers that operate in residual markets. Nearly $1.5 billion of premium was written in the private passenger and commercial auto insurance residual market that year. However, due to advances in underwriting and changes in marketing strategies, the residual market has declined dramatically since the 1990s, according to John Verruso, director of communications for AIPSO. Back in 1989, by comparison, the residual market accounted for 8.9 percent of total auto premiums. A significant reversal of this trend is not anticipated. “It will be interesting to see what happens,” Verruso says. “Historically, we have seen the residual market increase (during an economic slump). The auto insurance residual market’s share of the total market may grow in 2010. If it does, it will still be nowhere near the levels we saw twenty years ago.” Proportions of assigned risk premium vary greatly among states. North Carolina had by far the largest residual market in 2008 (the latest data available), with more than 14.4 percent of its total auto premium falling into that category, according to the AIPSO report. Massachusetts, in second place, had 6.1 percent in the market, followed by Maryland at 2.8 percent. Though all 50 states and the District of Columbia have a residual market, there are four different systems. The most common is the “assigned-risk plan,” currently found in 42 states and the District of Columbia, according to III. These plans are administered through an office created by the state and governed by a board representing insurance companies licensed in the state. Four states (Florida, Hawaii, Michigan and Missouri) have state-mandated pooling mechanisms through which all auto insurance companies doing business in the state share the premiums outside the voluntary market, as well as the profits or losses, according to III. North Carolina, New Hampshire and Massachusetts have reinsurance facilities. Here, an insurer decides whether to handle the policy as part of its regular “voluntary business” or transfer it to the reinsurance facility. An insurer is permitted to transfer a percentage of its policies to the pool. Profits or losses in this pool are shared by all auto insurers licensed in the state, according to III. (Massachusetts began a three-year process to convert to an assigned risk plan in April 2008, according to III.) Maryland is the only state that has its own state-funded system. Private insurers do not participate directly but are required to subsidize any losses from the operation. How an assigned-risk pool works Each state has its own eligibility rules for its assigned-risk pool, but typically you must have been declined for a car insurance policy or offered a policy at a rate higher than the pool’s premiums within the last 60 days. Some states may require that you’ve been turned down more than once. AIPSO has each state’s manual online. Your car insurance agent will help you get a policy from the residual market. You’ll likely sign a declaration stating that you’re eligible under your state’s rules and your agent will tell you your rate and the insurance company to whom you’re assigned. This rate is set by your state insurance department, so no matter which insurance company you get, your rate remains the same. However, your premium will still vary according to factors such as where you live, your age and your driving record. Even in the residual market, you’ll have some policy options. Of course you’ll have to buy liability insurance for at least your state’s minimum requirements, but you will likely have a range of liability-amount choices above that, plus the option to purchase collision and comprehensive coverage. It’s possible you can get out of the pool within a year or two. Your residual-market insurer may offer you a policy in the voluntary market. States often provide incentives to insurers for these “take outs.” Or, you may be able to find a voluntary-market car insurance policy yourself. There’s no law against shopping around for car insurance! The standard assigned-risk period is three years, according to Verruso. Then you’ll be back in the voluntary market and, one hopes, not returning to the pool. Michelle MegnaContributor  . .Michelle, the former editorial director, insurance, at QuinStreet, is a writer, editor and expert on car insurance and personal finance. Prior to joining QuinStreet, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News. QuickTake The 10 most dangerous foods to eat while driving Insuring a car you don't drive See more > In case you missed it Best Car Insurance Companies of 2024 Car insurance rates by state in 2024 What is full coverage car insurance? How much does car insurance cost for seniors in 2024? A complete guide to adding a teenager to your car insurance policy in 2024 What to do after a car accident that’s not your fault Total warfare: What to do when your auto insurer totals your car Car insurance claims: Who gets the claims check? Used car insurance costs: Most and least expensive models to insure The Best Car Insurance for Bad Credit of 2021 The best car insurance companies for speeding tickets Car insurance after a DUI Guide to car insurance discounts Proper insurance coverage for college-bound children How to read your auto insurance policy A complete list of car insurance companies New driver insurance grace period: What you need to know How much do insurance agents make? Autonomous cars: 5 delightful and 5 distressing things Busted! Part 1: How insurance companies spot bogus claims Insurance options for rideshare drivers 10 things that are illegal but shouldn’t be 1/1 ZIP Code Please enter valid ZIP See rates