The Auto Insurance Residual Market

Auto Insurance: The Residual Market

The auto insurance residual market (also called the shared market) is a pool of drivers who are too high-risk to get car insurance in the private market.

This high-risk pool (or “assigned risk pool”) is created by your state’s insurance regulators (the Department of Insurance), and its drivers are distributed to the insurers who operate in the state.

High-risk pools are common with insurance types like health insurance and car insurance. Creating a separate pool is costly and typically gets state or federal funding, but it prevents the insured outside the risk-pool from higher premiums.

You may want to consider the residual market if you:

  • have little driving experience
  • have never owned a car or had auto insurance before
  • have recent car accidents or moving violations on your driving record
  • have a bad credit history
  • are a senior citizen
  • are a teenager
  • own a specialized, high-performance car
  • own a particularly high-value car
  • own a classic or vintage car
  • live in a “high-risk” area with high rates of theft or vandalism

Facts about the Auto Insurance Residual Market

Here is some more information about the residual market:

  • You should consider the residual market a last resort; the same policy can cost up to four times more on the shared market than it would on the normal market.
  • Your state’s Department of Insurance will assign your state’s bigger insurers (those who sign a larger percentage of normal car insurance policies) a higher percent of the drivers from the assigned risk pool.
  • Most drivers can find a much better deal on the Non-Standard Auto Insurance Market than they would get on the residual market.  Be sure to check there first.
  • The eligibility requirements for the assigned-risk pool vary from state to state.  In most states, you have to have been denied coverage (or have been offered a rate higher than the rates in the non-voluntary market) within the last 60 days.
  • If you keep a clean driving record for a significant period of time (1 – 3 years), you will be able to get out of the residual market and back to buying standard car insurance.

To learn more about the Auto Insurance Residual Market, contact your State Insurance Regulator.