The Empire State requires motorists to maintain some of the most extensive auto insurance coverage in the nation, and also some of the most expensive. But not all drivers will be able to obtain a policy in the voluntary market. High-risk drivers pose a special problem to an insurer. The more likely someone is to make a claim, the more likely they will lose money by insuring them. Without the NYAIP, New York automobile insurance would be nearly impossible for some people to obtain for their motor vehicle.

All New York auto insurance companies must participate in the NYAIP by issuing coverage to assigned motorists. In addition, all licensed agents and brokers conducting business in the state must be certified by the Superintendent of Insurance prior to submitting applications to the plan.

For motorists to obtain coverage through the NYAIP, they must be able to prove that they have been unable to get a policy in the voluntary market within the past 60 days. Once assigned to carriers, renewals must be provided for no less than three years.

History of the New York Automobile Insurance Plan

In 1972, New York enacted the No-Fault Law to speed up the claims process and reduce the number of civil court cases related to car accidents. Under this law, liability coverage doesn’t pay the medical costs of bodily injury from an accident. Instead, your own no-fault insurance policy will be the one to pay for bodily injury.

The voluntary insurance market is very picky with their clients. High-risk drivers are more likely to get into a car accident, and it doesn’t matter who’s at fault. The insurer will have to pay medical bills no matter who is to blame.

To reduce the number of uninsured and underinsured drivers on the road, the New York insurance department created the NYAIP. Drivers are randomly assigned an insurance company to provide them coverage. The number of drivers each company is assigned is based on its share of the market.

Coverage under the NYAIP

Insurance law defines the minimum liability insurance policies as follows:

$10,000 property damage to cover the costs of damage to a vehicle or structure. $25,000 bodily injury per individual injured in a motor vehicle accident. $50,000 bodily injury per incident. $50,000 for the death of an individual. $100,000 for the death of two or more people per accident.

Any costs beyond the maximums listed on your policy will come out of your pocket. You are financially obligated to pay for damages you caused in an accident, and failure to do so can come with harsh punishments.

Comprehensive and collision policies are not required by law, but you do have the option of purchasing them through the NYAIP. However, the cost of these policies is quite high. Generally, you can expect to pay twice as much for coverage on your vehicle as you would on the voluntary market.

If you are looking to buy a new vehicle and you have a poor driving history, think twice before getting a loan. Unless you are able to buy a car outright, you will be required by your lienholder to keep collision and comprehensive coverage on your vehicle until you pay it off.

As costly as these policies are, driving without coverage is much worse. If you are in an accident and without an insurance policy, your license will be revoked, and your registration will be suspended for a year. You will also have to pay a $1500 fine and pay $750 to get your license renewed once it’s no longer suspended. Furthermore, having the citation on your driving history will make insurance cost even more.

Who Needs the NYAIP?

There are a number of reasons why a driver may need assistance getting insured through the New York Automobile Insurance Plan. It is mainly due to the risk involved with insuring the particular individual. If a company finds that an applicant cannot be insured at a profit, they may turn the driver away. Or, they made add surcharges to a driver with an existing policy. This is usually because of one of the following conditions:

  • Poor driving history
  • Lack of driving experience
  • Frequent claims

Motorists should keep in mind that these policies are often more costly than those provided in the open market and may want to apply to the plan as a last resort. Taking the time to shop around could lead a New Yorker to more affordable options.

While it may seem like a good idea to let someone with a better driving history be the person who buys auto insurance on a vehicle, keep in mind that insurers will generally only sell a policy to the owner of a vehicle. If they find out you regularly drive a vehicle that you’re not on the policy for, they may deny any claims you need to make. The better bet is to improve the factors that are making coverage expensive for you. Drive cautiously, improve your credit, and rack up as many discounts as you can.

Why Rates are Higher with the New York Automobile Insurance Plan

Drivers who need to utilize the NYAIP are generally higher-risk than other drivers. That means they cost insurers more - and those high costs are passed on to the driver.

The NYAIP determines your rates the same way any insurer does. Your age, experience, driving record, sex, and address will all affect the premiums. They also factor in things like your credit score and marital status. The type of vehicle you drive, how much you drive it, and the car’s actual worth are all determining factors for the price of your premiums. Plus, if it’s a target for theft, comprehensive coverage will cost you more, especially in high crime neighborhoods.

The higher the risk you are to insure, the more you will have to pay. Taking a defensive driving course and practicing safe driving will lead to lower rates. The longer you go without making a claim, the less you will have to pay.

Getting Out of the Plan

Although safe driving is always encouraged, it can also lead to motorists receiving cheaper car insurance rates and eliminate the need for the NYAIP. If high-risk drivers can avoid citations and accidents for a period of three years, they can usually find an insurer that will give them coverage voluntarily. Cancelling your NYAIP coverage can be done easily without any cost to you.

Additionally, the state encourages consumers to shop around periodically to see if a company is available at more affordable rates than the carrier that has been assigned to them. If your driving history has improved, you should compare quotes from multiple insurers online by filling out a form. Within moments, you can see how much coverage will cost you. Once you’ve compared the rates and coverage offered by companies in your area, you can choose one that’s right for you and print out proof of insurance within a few minutes.