In the Bluegrass state, if you have a history of traffic violations or car accidents, auto insurers may consider you a high risk driver, and refuse to insure you in the “voluntary” market. Insurers basically pick and choose which motorists they're willing to insure in the "voluntary" or regular market, where safer drivers are the norm. If you do have trouble finding coverage, you can turn to the Kentucky Automobile Insurance Plan to apply for a policy. All drivers must have auto insurance in order to drive legally in Kentucky. The minimum coverages required are $25,000/$50,000 for Bodily Injury, $10,000 for Property Damage, and $10,000 for Personal Injury Protection. Higher limits are available, and they may be appropriate, depending on your financial needs.
What is the Kentucky Automobile Insurance Plan – KY AIP?
The KY AIP has been around since 1948. Its purpose is to provide auto insurance coverage to drivers that insurance companies deem too risky to insure. The KY AIP is not an insurance company itself, but rather an entity that assigns such drivers to existing auto insurers in Kentucky. All companies who want to write auto insurance in the state must agree to participate in the KY AIP, and cover some number of high risk drivers.
The Plan assigns drivers to auto insurers in proportion to the amount of auto insurance business they do in the state. So for example, if State Farm has 11% of the overall auto insurance market in Kentucky, then State Farm is required to accept 11% of the drivers assigned through the program. According to the Kentucky Department of Insurance, KY AIP should be considered a last resort. You will receive coverage, but you cannot choose your insurer.
Kentucky AIP Eligibility
In order to be eligible for coverage through the KY AIP, you must first try to find coverage in the voluntary market. In fact you must state on your insurance application that you have tried, but without success within the last 60 days.
If this is the case, you can apply to the KY AIP as long as you have a valid Kentucky driver’s license and a vehicle registered (or about to be registered) in Kentucky. However, you may NOT find coverage – even through the KY AIP – if they find out you've been delinquent on your payments, or lied on your application. Check if you have unpaid auto insurance bills from a previous insurer. Your assigned insurer considers your application to not be made “in good faith if they find something important on the application has been misrepresented in their view.
The good news is, as soon as you pay the outstanding auto insurance bill, you are eligible to apply KY AIP immediately. However, if you misrepresent something on your application and your insurer finds out, you may be barred from reapplying to the program for 12 months. You'll be stuck without coverage in Kentucky, and not able to legally drive unless you self-insure through the alternative proofs of financial responsibility here.
Kentucky AIP Coverage
Kentucky high risk drivers are offered the same kinds of coverages as are available in the voluntary market – they just may cost more. Also, even through the KY AIP, you may be denied coverages like physical damage. This is based on decades of data – in Kentucky and other states – that show that high risk drivers tend to file more claims. Once you are assigned an insurer, your coverage will last for 3 years. You are free to keep looking for insurance once you have coverage, and if you are able to find lower cost Kentucky insurance coverage elsewhere, you may cancel your policy through KY AIP at any time. Your coverage costs will be prorated and you will receive a refund.
The table below shows the types of coverages – including minimums and maximums – that are available to you. The more coverage you buy, the higher your premium will be.
|Mandatory Coverage||Kentucky Required Min. Limits||KY AIP Maximum Limits|
|Bodily Injury (BI)||$25,000 per person / $50,000 per accident||$50,000 per person / $100,000 per accident|
|Property Damage (PD)||$10,000 per accident||$25,000 per accident|
|Personal Injury Protection (PIP)||$10,000 per person per accident||$40,000 per person per accident|
In addition to the required coverages, there are optional ones as well. Medical Payments coverage covers your medical bills no matter who is at fault. It is only available if you turn down basic PIP coverage. Uninsured and underinsured driver coverage will be offered, but you can turn them by checking a box on the application. Talk to your insurance agent about what coverages are appropriate for you.
Click on the coverage names to learn more about them:
|Optional Coverage||KY AIP Min. Limits||KY AIP Maximum Limits|
|Medical Payments (MED)||$1,000 per person per accident||No higher limits|
|Uninsured Motorist BI (UMBI)||$25,000 per person / $50,000 per accident||As high as, but not higher, than your BI limits|
|Underinsured Motorist BI (UM/UIMBI)||$25,000 per person / $50,000 per accident||As high as, but not higher, than your BI limits|
Kentucky AIP Premiums and Payments
The Kentucky Department of Insurance indicates that premiums through the KY AIP will likely be higher than average. Because there are so many auto insurers in the state, each with their own way of evaluating you as a risk, it’s impossible to know exactly how much higher your premiums might be. It pays to know what factors most insurers use when they assess you so that over time you can choose to act in ways that reduce your premium.
Premiums through KY AIP can be paid in 2 ways. The first is to pay 100% of the annual premium up front with your application. The advantage of this is that you’re paid up for the year, and can’t miss a payment. The second way is an installment plan. This requires that you pay 40% of the annual premium with your application. Then you will have to pay a 30% chunk after 3 months and the final 30% at the 6 month mark. A $4 fee is tacked on to each installment payment.
Remember there is no “grace period” when it comes to paying for your auto insurance. Pay your bill on time, in order to avoid the risk of being automatically cancelled by your assigned company.
How Do I Get Insurance through Kentucky AIP?
Because all auto insurers in Kentucky can write insurance through the KY AIP, you can contact any insurer to help you apply.
For more information about the Automobile Insurance Plan, call the Kentucky Department of Insurance at 502-564-6046.