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Q

What is a JUA or an assigned risk pool?


A

JUA stands for Joint Underwriting Association. Some states have created a Joint Underwriting Association, commonly referred to as just JUA, which will insure drivers who are not able to secure car insurance from an insurer on their own.

In other states instead of having a JUA set up there is an assigned risk pool. This is to make sure all motorists can find insurance even if they have a bad driving record, a lot of claims, etc that keeps them from finding car insurance in what is known as the voluntary insurance market.

Voluntary insurance is when you are able to obtain an auto insurance policy by shopping around for an insurer on your own. If you are considered high risk you may have difficulty acquiring insurance through this regular voluntary market.

Most states' insurance regulators work the insurance industry to make it possible for high risk drivers to acquire the required car insurance, so that the motorist does not drive around uninsured. Special insurance plans set up by various states can be known as JUA, residual, shared, ceded, assigned risk or involuntary markets.

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Premium rates for a policy through an assigned risk or JUA insurer will normally be higher than policies that are obtained through a voluntary insurer. This is due to the fact that those unable to obtain insurance through the voluntary market are usually high risk drivers and thus will pay more than those categorized as a good, safe driver.

For examples of some states' assigned risk plans see below.

In California if you cannot find a company that will insure you, you can get liability coverage through the California Automobile Assigned Risk Plan (CAARP). This plan is designed for drivers who do not qualify as good drivers and are unsuccessful in obtaining insurance from non-standard or approved surplus lines insurance companies.

The plan works by taking your application and assigning it to an insurance company. All insurance companies licensed in the state must accept CAARP applicants. The amount of CAARP assignments is based on insurance company market share. The more automobile policies an insurance company issues, the larger the portion of CAARP assignments they are required to take.

The rates used by the plan are the same no matter what insurance company issues the policy. The plan also offers installment options. After three years with a clean driving record, consumers underwritten through CAARP can move from the program to a standard lines insurance company. No broker's fee can be charged in connection with a CAARP policy.

In New York if you cannot find an auto insurance company that will sell you an auto policy with the required coverages you need or want, the New York Automobile Insurance Plan (NYAIP), commonly known as the Auto Plan or Assigned Risk Plan, is a special insurance facility established under New York State law to assure that coverages are provided.

When an application is submitted through the NYS Auto Plan, it will be assigned to a particular insurer among many of the auto insurers doing business in New York State. The premium for an Auto Plan policy should be the same regardless of the insurer to which your application is assigned and no matter what agent or broker handles your application.

In the event that your auto insurance coverage is written through the Auto Plan, the insurer issuing your policy must insure you for three years before it can non-renew your policy (unless it wishes to write the renewal on a voluntary basis).

At the end of this three-year period you may shop for a voluntary market policy or re-apply to the Auto Plan. However, there is no requirement for you to remain in the Auto Plan, and usually you will be better off in the voluntary market. If, at any time, you can find an insurer in the voluntary market that is willing to cover you, you may terminate your coverage with the Auto Plan insurer and obtain coverage from the new company.

The voluntary auto insurance market in New York is competitive and affords coverage to those consumers an insurance company believes it can insure at a reasonable profit. Historically, most auto insurers wrote business that was either preferred (better than average) or standard (average).

There are a number of insurers in NYS that specialize in insuring drivers who previously would have not found coverage outside of the Auto Plan (nonstandard), due to one or more underwriting factors (driving record, age of vehicle, being a newly licensed driver, etc.). However, as a last resort, the residual market (the Auto Plan) remains available to cover consumers who have been declined coverage in the voluntary market.

Premiums for those going through the JUA or an assigned risk plan to get auto insurance coverage are generally higher, because the overall loss experience for this group of drivers has been consistently worse compared to the voluntary market. However in some states under the assigned risk plan you can get some discounts. For instance under the New York Auto Plan rules, drivers are eligible for a "careful driver" discount if they are accident free and conviction free for at least one year in the Auto Plan and have at least four years experience as a licensed driver.

There are some insurance companies that specialize in the non-standard auto market for what they consider to be high-risk drivers. Should you decide to buy in one of these markets, be sure to shop carefully because eligibility requirements and rates vary.

If you are having a hard time finding auto insurance due to your driving record, lack of driving experience, etc than you may need to apply for an assigned risk plan offered by your state or go through the JUA if that is offered instead. For more information about JUA or assigned risk plans in your state you can contact your state's insurance regulator.


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