Assigned Risk Coverage
One of the goals of the system of motor vehicle insurance in the United States is to see to it that insurance coverage on the owners and operators of cars and trucks be as widespread as possible, so that those who suffer personal injury or property damage in auto accidents can be assured that they will be recompensed for their losses. A complicating factor along the path to reaching this goal is that the records of some drivers and the risk assessment practices of insurers may combine to make it impracticable for those drivers to obtain the required amount of insurance coverage at an affordable premium level, or even to obtain such coverage at all. Assigned risk coverage has been devised as a means of overcoming this difficulty.
State assigned risk plans basically operate by creating a pool made up of those drivers who would otherwise not be able to obtain necessary insurance coverage and apportioning the responsibility for providing coverage on the members of that pool among the insurers who write motor vehicle policies in the state. As a consequence of the unique and higher-risk nature of the assigned risk business, state laws covering assigned risk plans often contain detailed provisions concerning application for, participation in, and termination of assigned risk coverage.
The business of insurance in the United States, including that of motor vehicle insurance, has traditionally been regulated by the separate laws of each state rather than by a single unified body of federal law. As a result, legal standards governing the nature and operation of assigned risk coverage plans will vary from state to state, and will be found in the state statutes regulating the business of insurance and in court decisions dealing with matters of insurance law.
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