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What If You Can’t Get Auto Insurance? Is the Residual Market the Right Way to Go?

by EINSURANCE

Looking for cheap auto insurance quotes and not liking what you see?  Maybe the cards are stacked against you. Just for a moment, imagine you’re a car insurance underwriter’s worst nightmare, statistically speaking. You’re a young man, under 30. You drive a convertible sports car. You’ve never had car insurance…or you let your policy lapse… or your carrier dropped you for non-payment, too many accidents, moving violations or drunk driving convictions. Maybe you were caught driving or had an accident without car insurance. Oh, and you have really lousy credit, too.  You’re not merely a high risk, you’ve won the high-risk championship. But you still need car insurance.

 

Chances are there will always be somebody out there willing to sell you a car insurance policy, if you’re prepared to pay the price. Even if you have the cruddiest driving record in history, it still pays to shop around, and auto insurance quotes online make it easy to compare costs.

 

Still no luck? As an absolute last resort, you can explore the residual market. This is essentially a high-risk pool created by your state’s insurance regulators. The policies are not cheap. Often they cost up to four times more than a standard policy. But since some states will actually jail you or permanently suspend your driving privileges if you’re caught on the road without coverage, consider them a comparative bargain.

 

This is not a government insurance program. The residual auto insurance market, also called the non-voluntary or shared market, spreads the risk of covering drivers among licensed insurance carriers, who are required to participate in the program as a condition of selling car insurance in a particular state. To keep it fair to the insurance companies, those that write the highest percentage of standard policies in your state will be required to insure a higher percentage of risky drivers through the pool.  Good drivers, by the way, shoulder some of the cost of your high-risk policy in the form of higher premiums. The good news for all drivers is that, according to the Insurance Information Institute, fewer than 2% of the nation’s drivers are covered by the residual market.

 

If it is your last shot at securing auto insurance, the residual market also provides you a way to eventually  get out of the high-risk pool. Policies vary from state to state, but generally, by keeping your driving record clean and maintaining your policy for three years, you may be able to qualify for cheaper auto insurance quotes.

 

Before you settle for this last-resort option, exercise your rights. If you feel you have been denied auto insurance unfairly, contact your state’s insurance regulator. And shop for competitive car insurance quotes online. 

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