Assigned risk means a driver of a motor vehicle, or a class of such drivers, who would be denied insurance coverage by insurance companies, but are required to be covered under U.S. state law. The term assigned risk is also used in Workers' compensation law.
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Motor vehicle insurance
The state government, usually the Department of Motor Vehicles, assigns the risky motorists to automobile insurance companies.
High risk drivers are often undesirable to insurance companies, and may not be able to purchase insurance through conventional means. They are considered high-risk because of numerous speeding or other traffic tickets, or a recent history of motor vehicle accidents, or in states that have a point system, accumulation of so many points. The state DMV point system may be different from the insurance companies' point system.
Several states in the U.S. have such assigned risk systems. New York is a typical system. The MVAIC, or Motor Vehicle Accident Indemnity Company, may assign high-risk drivers, and pays for victims of uninsured or underinsured motorists. Uninsured means the driver or owner of a motor vehicle has no insurance at all, while an underinsured person has insurance, but the coverage is insignificant compared to the potential damages accrued from a tort lawsuit.
Workers' compensation
Assigned Risk systems are also used for workers' compensation, whereby businesses who have had unsatisfactory loss performance or whose employees perform such hazardous functions that voluntary insurance companies will not insure them, can be assigned to an insurer.
A common problem with assigned risk is that some states' assigned risk plans only provide coverage for that state, causing businesses whose employees travel to other states to have various issues, including but not limited to the possibility of an uncovered claim from an employee claiming another state's benefits. If unable to secure a voluntary policy providing multiple state coverage, it is always possible to purchase a separate state's Worker's Compensation fund or NCCI assigned risk to fill the coverage gap, but this can be unfairly cost inefficient as some payroll is inevitably rated for in more than one policy - causing the premium to be much higher than if a voluntary coverage had been obtained.
This is especially an issue for Truckers or Contractors whose rates are already high and for whom it can be very difficult to obtain voluntary coverage due to the nature of their work.