If you are considered a high risk driver due to a record of traffic tickets or accidents, you may have difficulty finding auto insurance coverage in the “voluntary” market. “Voluntary” is the insurance industry term for the regular insurance market where insurers voluntarily rate and insure drivers. If you seek insurance coverage and are turned down, your “insurer of last resort” is the Louisiana Automobile Insurance Plan (LA AIP). They will arrange for you to get coverage. In the Bayou state, all drivers must have liability auto insurance coverage in the amounts - at the minimum of 15/30/25.
What is the Louisiana Automobile Insurance Plan (LA AIP)?
The LAIP has been around since 1972. It’s a voluntary agreement between the auto insurance companies in the state and the Louisiana Department of Insurance to allocate and share high risk drivers equitably among insurers. While insurers usually have the choice to accept or reject an applicant in the voluntary market, they must accept any driver assigned through the LA AIP, provided that they are eligible. High risk drivers tend to file more claims than average and generate losses for the companies. An “assigned risk” plan like the LA AIP protects any one company from taking a huge loss, while continuing to provide coverage for as many drivers as possible.
High risk drivers are distributed to insurance companies based on the companies’ overall share of the auto insurance market in the state. So for example, if Progressive Insurance has 5% of the total auto insurance market in Louisiana, they will cover 5% of the high risk drivers in the state too.
Any Louisiana insurance agent can submit applications to the AIP, and the AIP designates which company will insure you. By law, your insurance agent must tell you that your insurance policy has been placed through the LA AIP and that cheaper policies are available.
Louisiana Automobile Insurance Plan Eligibility
You are eligible for insurance coverage through the Plan as long as you have a valid driver’s license and a car registered (or about to be registered) in the state. You must also certify on your insurance application that you have looked for insurance in the regular market within the last 60 days, without success.
You may NOT be eligible for coverage - even through the AIP - if you have a record of not paying your auto insurance premiums or if you fail to provide accurate information on your insurance application. If you go back to your last insruer and pay your past due insurance bill, you may apply to the AIP immediately. However, if your designated insurer discovers that you have omitted, lied, or otherwise misrepresented facts on your application, you can be turned down for insurance AND barred from re-applying for 12 months.
Louisiana AIP Coverages
In accordance with Louisiana’s Financial Responsibility law, you must carry the minimum coverages as stated. You can request higher levels of coverage – as shown in the table below -for a higher premium, of course. Talk with your insurance agent about your insurance needs.
|Mandatory Coverage||Louisiana Min. Required Limits||LA AIP Max. Limits|
|Bodily Injury (BI)||$15,000 per person / $30,000 per accident||$250,000 per person / $500,000 per accident|
|Property Damage (PD)||$25,000 per accident||$100,000 per accident|
Here is a table listing the optional coverage available through the LA AIP. Medical payments coverage may not be necessary if you have Louisiana health insurance. Also note that if you wish to purchase any of the two physical damage coverages, you must bear a deductible, which you may choose among $100, $250, and $500.
|Optional Coverage||LA AIP Min. Limits||LA AIP Max. Limits|
|Medical Payments (MED)||$1,000 per person per accident||$5,000 per person per accident|
|Uninsured Motorist Bodily Injury (UMBI)||$15,000 per person / $30,000 per accident||As high as, but no higher than, your BI limits|
|Uninsured Motorist Property Damage (UMPD)||$25,000 per accident||as high as, but no higher than, your PD limits|
|Physical Damage (collision and comprehensive)||Actual cash value, and at least $100 deductible||Actual cash value of your car, up to a maximum coverage of $25,000|
Once you have a designated insurance company, your will be covered for 3 years. You policy will renew annually, unless you become ineligible for coverage due to non payment. This is a good time to focus on improving your driving record so that you may qualify for the voluntary market, and the better rates in Louisiana. If you find auto insurance at a better rate than your designated insurer, you may switch to the other company. However you will pay a penalty for switching in the middle of the policy term.
At the end of 3 years, if you remain a high risk driver, your designated insurer is free to either extend your policy for another year, or throw you back in the “pool.” If you land in the pool, you will be treated as a new applicant, and the LA AIP will designate a new insurer for you.
Louisiana AIP Premiums and Payment Plans
According to the Louisiana Department of Insurance, the premiums you will pay for coverage through the LA AIP will likely be higher that what you would pay for insurance in the voluntary market. Because there are so many auto insurers in Louisiana, each with their own set of criteria for evaluating you as a risk, there is no hard-and-fast rule for how much higher your premium might be. If pays to understand the typical factors that most insurers consider when they price your premium. That way you can improve your driving habits or make other changes over time that will enable you to obtain lower insurance rates.
The state of Louisiana is unusual in that it requires drivers newly insured through the Plan to pay the full annual premium up front with the application. There is no installment payment plan, which other states have made available. 30 days before your policy expires, you will either receive a renewal notice, with a bill for the full annual amount. Or you will receive a notice that you are NOT being renewed, along with a statement of the reasons why. If you are not renewed, you can contact the Louisiana AIP to discuss your options.
How Do I Get Insurance through the Louisiana AIP?
Any licensed auto insurer in Louisiana should be able to help you apply for coverage through the AIP. For more information about Louisiana’s Automobile Insurance Plan, call the Louisiana Department of Insurance at 1-800-259-5300.