Janet was unable to obtain auto insurance in the voluntary insurance market.She was contacted by the state insurance department and notified that XYZ Insurance would be her insurer.The mechanism used in Janet's state to provide auto insurance to high-risk drivers is a(n)
A)automobile insurance plan.
B)joint underwriting association.
C)specialty automobile insurer.
D)reinsurance facility.

Question

Quizplus · Accepted Answer

An automobile insurance plan (also known as assigned risk plan) is a mechanism used by states to provide auto insurance to high-risk drivers who are unable to obtain insurance in the voluntary market. Under this plan, insurance companies are required to participate and accept a certain number of high-risk drivers assigned to them by the state. So, in Janet's case, she was assigned to XYZ Insurance through the automobile insurance plan. Joint underwriting associations, specialty automobile insurers, and reinsurance facilities are other types of insurance mechanisms that may be used in certain situations, but they are not specifically designed to provide auto insurance to high-risk drivers.

Janet Was Unable to Obtain Auto Insurance in the Voluntary