What are the Voluntary and Involuntary Insurance Markets?
If you or your insurance agent contact an insurance company to get an auto insurance policy and the insurance company agrees to write you a policy, that insurance company is voluntarily writing you an insurance policy, or giving you an insurance policy in the voluntary market. If you can’t get an insurance policy in the voluntary market, you will have to get an insurance company assigned to you through the MAIP, or the private passenger auto insurance involuntary market.
Is The MAIP An Insurance Company?
No. The MAIP is the way you get insurance if you or your agent can’t get you an auto insurance policy in the voluntary market. If you can’t find a company to voluntarily give you a policy, you will be assigned to a company through the MAIP and that company has to give you an insurance policy except in very limited situations.
Generally, every company that sells private passenger automobile insurance in Massachusetts has to participate in the MAIP by acting as an Assigned Risk Company (ARC). For the most part ARCs are the same companies that you will see selling insurance in the voluntary market. Companies usually have some drivers they choose to insure voluntarily and other drivers that are assigned to them through the MAIP.
The MAIP is administered by Commonwealth Automobile Reinsurers (CAR) according to rules that are approved by the Commissioner of Insurance. The coverages and services provided by an ARC are comparable to coverage provided to drivers in the voluntary market, and the MAIP has rates that have been filed with and approved by the Commissioner of Insurance. Having a separate MAIP rate means that every person who gets insurance through the MAIP can pay at most only the MAIP rate regardless of the company to which the person is assigned. The MAIP rates are generally higher than the rate an insured will pay to any company that writes the policy voluntarily, but a person who gets insurance through the MAIP may get to pay less than the MAIP rate because the law requires that the ARC compare the rate it would charge a voluntary customer with the same driving record to the MAIP rate and charge the lower of the two rates.
How Do I Get Assigned To An Insurer Through The MAIP?
Before you can be placed in the MAIP you have to try to find coverage on your own in the voluntary market - either through an agent or directly from a company. If you can’t find a company that is willing to write a policy for you, any insurance agent can submit an application for insurance to the MAIP for you and have you assigned to a company. You do not have any choice about what company you are assigned to in the MAIP so it’s good to try to find a company that will write you a policy voluntarily.
If a company denies your application for automobile insurance in the voluntary market, it has to tell you in writing why it won’t write you a policy. Companies might deny your application for different reasons, so each company may give you a different reason for its denial of your application. The way a company decides whether to issue a policy to someone and what coverages to offer to that person is called underwriting. A company underwrites by looking at certain things about the person, like her driving record, or what kind of car he drives.
After an agent or company submits your application to the MAIP, you will be assigned to an ARC and that company has to write you an insurance policy. You can qualify for group and other discounts offered by the company you are assigned to but you might have to fill out another application to find out if you can get those discounts. Companies are allowed to sell you any coverage that they offer to customers through the voluntary market, but they don’t have to offer you all of those coverages. If you are assigned to an insurer through the MAIP, you will be offered an installment payment plan unless you have had a policy cancelled in the past for non-payment, or if a check bounced that you used to make a payment. If you didn’t pay your automobile insurance premium at any time in the last 12 months, your ARC may require you to pay your whole year’s premium in full before giving you a policy.
Every agent licensed to sell automobile insurance in Massachusetts must be certified to write policies through the MAIP. Agents are called Assigned Risk Producers for the policies they sell through the MAIP. This means that any agent can help you complete an application to the MAIP. An agent that submits a MAIP application for you will continue to service your policy no matter which Assigned Risk Company is assigned your policy. If you like your current agent, you do not have to switch. You can also keep your other insurance policies - like a homeowner's or renter’s insurance policy - with the company that gives you that policy now.
The assignment of policies in the MAIP is made depending on how many policies a company writes in MA voluntarily. Generally, the more policies the company writes voluntarily the more policies are assigned to it through the MAIP. Certain situations can affect which company might be assigned your policy in the MAIP. For example, if a member of your household already has her own policy, or if you still owe some of a prior premium to a company. This should not affect the quality of service the company gives you. The service provided to you by the ARC must be the same it gives to its drivers in the voluntary market.
An ARC can refuse to offer insurance to any applicant, or to renew an existing policy, if the applicant does not have a valid driver's license or if her license is suspended or revoked. People without a valid driver’s license should work with the Registry of Motor Vehicles to get a license or have a license reinstated.
How Will I Know If I Have Been Assigned To An Insurer Through The MAIP?
Your agent will tell you when you have been assigned to a company through the MAIP. In some cases, your agent may fill out a MAIP application before you find out that you have been denied coverage in the voluntary market. You will always receive a written notice any time you are denied coverage.
Can I Dispute My Assignment To A Particular Company Through The MAIP?
You may dispute an assignment to a particular company through the MAIP only for a few reasons:
- If you are currently or have previously been involved in a lawsuit with the company to which you are assigned;
- If, before you got assigned to the company, you filed a consumer complaint with the Division of Insurance or the Attorney General's office against the company to which you are assigned; or
- If, before your assignment to that company, you have invoked your rights under the state’s consumer protection law, or a similar statute, to pursue action against the company for perceived unfair or deceptive acts. For example, you previously issued a Chapter 93A Demand Letter to the company.
If one of those three situations applies to you, you may request assignment to a different company by completing a Request for Reassignment Form. You must complete and submit this form within 30 days of either (1) your initial assignment to the MAIP, or (2) your annual policy renewal date. You can get a Request for Reassignment form from your agent or online. When you submit your reassignment request, you will have to give supporting documentation that you are eligible to be reassigned to a different company.
What If I Am Put Into The MAIP Because Of Inaccurate Information?
Whenever you apply for automobile insurance, you should make sure that all of the information on your application is true, accurate and complete. If a company denies your application because of incorrect information, you may re-apply with the corrected information. Fixing inaccurate information doesn’t guarantee that a company will insure you voluntarily.
How Do I Get Out Of the MAIP?
Driving safely and having a clean driving record is the best way to get a company to offer you coverage voluntarily. Since drivers can change insurers at any time, you can shop around for insurance throughout the year. If you find a company that will give you a policy, you can switch companies. Be aware that you may have to pay a penalty for switching in the middle of your policy year.
This penalty for switching early is called a "short rate" The reason this penalty is allowed is so a company can cover the costs of writing, administering and canceling your policy. The amount of the short rate penalty gets lower as your policy renewal date gets closer. You should contact your agent or company to find out how much the penalty will be before you cancel your current policy.
Who Can I Call With Questions or Complaints about The MAIP?
You should first contact your agent or company with questions about your insurance coverage or your assignment in the MAIP. You can also contact the Division of Insurance's Consumer Services Unit.