2012 Consumer Guide to Automobile Insurance
The Voluntary & Residual Markets
Many insurers write auto insurance in New York State. When shopping for auto insurance, please remember that if one or two agents or brokers are unable to find coverage for you, it does not mean that there is no insurer willing to insure you on a voluntary basis. No single insurance agent or broker will have contractual relations with all auto insurers doing business in New York. You should ask the particular agent or broker to identify the specific auto insurance companies to which he or she has access.
However, 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. Most agents and brokers licensed to place automobile insurance policies are certified to place coverage through the Auto Plan. If you cannot locate a certified broker or agent, you can obtain assistance in finding a certified producer by contacting the Auto Plan directly at: New York Automobile Insurance Plan, 22 Cortlandt Street, Suite 1500, New York, New York 10007-3151 (Tel: 212-943-5100) (Fax: 212 943-0459). Additional information about NYAIP can be found at https://www.aipso.com/PlanSites/NewYork.aspx.
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 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.). Many insurers use "multi-tier" rating programs, in which more than one rate level can be established within the same company. In order to be approved, the program has to be structured to encourage movement of drivers out of the Auto Plan. Under these programs, insurers broaden their underwriting guidelines and place insureds in rating "tiers" with others who have similar characteristics. Upon renewal, the insured's experience and characteristics are re-evaluated to determine if he or she qualifies to move to a different tier. If your insurer uses a multi-tier rating structure, you should have received a disclosure notice describing their program, and your policy declarations page must indicate in which tier your policy is rated. 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 Auto Plan coverage are generally higher, because the overall loss experience for this group of drivers has been consistently worse compared to the voluntary market. However, under 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.
When an application is submitted through the 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. You should be wary if you do obtain different quotations for an Auto Plan policy. There have been cases where an agent or broker "low-balls" by intentionally quoting a lower premium in order to get the business. Please note that the insurer is not bound by inaccurate quotes on the part of the agent or broker, who should be reported to the Auto Plan and the Department.
Consumers can obtain the following auto insurance coverages through the Auto Plan:
- the minimum limits required by law for bodily injury and property damage liability, basic No-Fault, and uninsured motorists insurance;
- optional higher limits up to $250,000/$500,000 in bodily injury liability and up to $100,000 in property damage liability;
- OBEL limits of $25,000 and Additional PIP limits of $50,000, resulting in higher aggregate No-Fault limits up to $125,000 on an optional basis;
- optional SUM coverage up to $250,000/$500,000;
- optional supplemental spousal liability coverage included within the bodily injury limits purchased;
- optional physical damage coverages (collision and comprehensive) up to the amount of $50,000, with several deductible options; and
- mandatory rental car coverage (described in section C of Required Auto Insurance).
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 nonrenew 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 “short-rate” cancellation charge (discussed in Chapter XII) does not apply if you cancel an Auto Plan policy in this situation.