What is a high-risk auto insurance pool?

A high-risk auto insurance pool is a state-sponsored market for drivers who are unable to purchase car insurance on their own due to their high-risk status. High-risk auto insurance pools are also sometimes referred to as “assigned-risk pools,” “residual markets” and “shared markets.”

High-risk auto insurance pools operate differently depending on the state. The vast majority of states use an assigned risk system in which drivers are assigned to different insurance companies that are then required to give them coverage for a certain period of time. The eligibility requirements for entering these high-risk auto insurance pools also vary, but in most cases, you’ll have to prove that you have been denied a car insurance policy within the past 60 days. Some states will even require you to be denied more than once.

While most high-risk drivers will be able to find car insurance on the traditional market, there are some drivers who are so risky that insurance companies don’t want to cover them. This is usually because of a driving record with serious offenses, like DUI or reckless driving. But regardless, these drivers still have to comply with state laws requiring a certain level of insurance coverage. High-risk auto insurance pools allow any driver to get the minimum coverage they need, although it will be more expensive than anything found on the traditional market.

Although insurance from a high-risk pool tends to be pretty costly, you only have to stay as long as your driving record prevents you from getting insurance on the traditional market. While insurers are required to cover drivers in the high-risk pool for a certain amount of time (usually three years), you can leave the pool early if you find a policy with another company or if your assigned insurer offers you a regular policy.

To learn more about your state’s high-risk auto insurance pool, contact your state insurance department.