Guides
Assigned risk plans: insurance of last resort
How state assigned risk plans and other residual market programs insure drivers no company will take, who qualifies, what it costs and how to apply.
An assigned risk plan is a state program that guarantees car insurance to drivers who cannot buy it from any company in the regular market, usually because of serious violations, a DUI, repeated claims or a long lapse. Every insurer that sells auto insurance in the state must take part, either by accepting assigned drivers or by sharing the plan's losses. Coverage is usually more expensive and more basic than in the regular market, so it is meant as a last resort and a path back to standard coverage.
Why the plans exist
Every state requires drivers to carry insurance or prove financial responsibility. If no insurer would sell a policy, a driver with a bad record could not legally drive at all. So states created a "market of last resort," known in the industry as the residual market. Insurers fund it in proportion to their share of the state's auto market.
AIPSO, which has served the auto residual market since 1973, provides services to most state plans and describes itself as the service provider to "the market of last resort" (AIPSO); its site links to plans for nearly every state. Some states run their own facilities.
The four main models
| Model | How it works | Examples from state guides |
|---|---|---|
| Assigned risk plan | Applicants are assigned to insurers in proportion to each insurer's market share; that insurer issues and services the policy | California Automobile Assigned Risk Plan (CAARP), Pennsylvania Assigned Risk Plan, New York Automobile Insurance Plan, New Jersey Personal Automobile Insurance Plan, Massachusetts Automobile Insurance Plan (run by Commonwealth Automobile Reinsurers) |
| Servicing carrier or pool | Appointed servicing insurers write the plan's business and premiums, losses and expenses are shared by every insurer; under AIPSO's Personal Auto Insurance Procedure a servicing carrier writes all of it, while a Private Passenger Pool splits business between a servicing carrier and direct assignments | Used in some AIPSO-administered states |
| Reinsurance facility | Any insurer must write the driver, then can transfer ("cede") the risk to a state facility whose losses are shared | North Carolina Reinsurance Facility; New Hampshire's reinsurance facility |
| State fund or joint underwriting association | A state-created insurer or association writes the policies | Maryland Automobile Insurance Fund (Maryland Auto); Hawaii Joint Underwriting Plan; Florida's joint underwriting association |
According to AIPSO, the states where insurers receive direct assignments are Arizona, California, Colorado, Connecticut, D.C., Delaware, Idaho, Maine, Montana, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, South Carolina, Utah, Vermont, Washington, West Virginia and Wyoming. Texas drivers who cannot find coverage can buy liability, PIP and uninsured motorist coverage through the Texas Automobile Insurance Plan Association. Your state guide names your plan.
Who uses them
Plans are generally for drivers who have tried and failed to get coverage in the regular market. Common reasons:
- A DUI or other SR-22-triggering conviction.
- Several at-fault crashes or major violations in a few years.
- A suspended or recently reinstated license.
- A long period without insurance.
- In some states, a vehicle or driver profile that no company will write.
Eligibility rules are set in each plan's manual and differ by state, for example on licensing status, payment terms and unpaid premium from a previous policy. A plan producer can tell you what your state requires.
What the coverage looks like
- Limits: Plans offer at least the state minimum liability coverage, and many offer higher limits; physical damage coverage such as collision varies by plan.
- Price: Plan rates are set to cover the higher expected claims of the drivers they insure and are usually higher than a regular-market policy for the same driver. Rates are filed with the state.
- Service: The policy is issued by an assigned or servicing insurer, which handles claims like any other policy.
- Filings: Plans can file an SR-22 or state equivalent where required; AIPSO directs drivers who need one to their state plan office.
The regular market usually comes first
Before going to the plan, check whether a nonstandard insurer will write you. nonstandard auto insurers: who they serve and what to watch specialize in drivers with violations, lapses or SR-22 requirements, and they are often cheaper than the plan, with more coverage choices. The assigned risk plan matters most when those companies also say no.
A hypothetical comparison for a driver with a recent DUI, quoting the same 50/100/25 liability limits:
| Option | Hypothetical six-month premium | Notes |
|---|---|---|
| Standard insurer | Declined | Many standard carriers will not write a recent DUI |
| Nonstandard insurer A | $1,450 | Liability, SR-22 filing included |
| Nonstandard insurer B | $1,700 | Adds collision with a $1,000 deductible |
| State assigned risk plan | $1,900 | Liability only; payment terms set by the plan |
The figures are invented to illustrate the comparison. Use the car insurance quote comparison worksheet to line up real quotes on the same limits.
How to apply
- Get quotes from several insurers first, including nonstandard companies, and keep the declinations.
- Find a producer. Applications usually go through a licensed agent or broker certified for the plan. AIPSO's website has a Find-a-Producer tool, and AIPSO's own advice to drivers who cannot find a company is to use it.
- Have your information ready: license, vehicle details, driving history, any court or DMV orders, and the SR-22 requirement if one applies.
- Pay the required deposit or premium. Coverage typically starts after the application and payment are submitted, so do not drive until you have confirmation.
- Ask about the SR-22 if you need one, and confirm it has been filed with the motor vehicle department.
Getting out of the plan
Assigned risk coverage is meant to be temporary:
- Keep the policy active for the whole term; a cancellation for nonpayment can make the next policy harder to get.
- Drive clean. As violations and crashes age, they count for less; see how long accidents and tickets affect your rates.
- Shop again at every renewal, especially after a violation drops off your record or an SR-22 requirement ends.
- Consider a defensive driving course where it reduces points or premiums.
Low-income drivers with good records are a different case: some states offer subsidized programs, such as California's Low Cost Automobile Insurance Program and New Jersey's Special Automobile Insurance Policy. See state low-cost auto insurance programs. More options for drivers with difficult records are in high-risk car insurance: options when insurers say no.
Key takeaways
- Assigned risk plans guarantee coverage to drivers no insurer will take, funded by every insurer in the state.
- States use assigned risk plans, servicing-carrier pools, reinsurance facilities or state funds; AIPSO provides services to most of them.
- Coverage is usually basic and costs more than the regular market, so check nonstandard insurers first.
- Apply through a licensed producer, have your SR-22 requirement ready and do not drive until coverage is confirmed.
- Treat the plan as temporary: keep the policy in force, keep a clean record and shop again at renewal.