New York is a no-fault auto insurance state, which means that the auto insurer will cover its customer’s injuries and damages in the case of an accident, regardless of who is at fault. No-fault policies are implemented to decrease high court costs for claims. If you’re a motorist, with a car registered in New York, who doesn’t have or maintain coverage, you risk the chance of having your vehicle registration and driver license suspended. High risk drivers, who may struggle to find coverage in the voluntary market, must seek an alternative like the New York Automobile Insurance Plan (NYAIP) that will provide them with auto insurance. However, a policy obtained through the NYAIP will almost always cost much more compared to an identical policy you find directly with any given insurance company. As soon as you've built a better driving record, go back to the regular market for better auto insurance rates in NY.
What is the New York Automobile Insurance Plan (NYAIP)?
The New York Automobile Insurance Plan (NYAIP) assigns high risk drivers, who have been unable to find an insurer willing to cover them in the voluntary market, to an auto insurance carrier. NYAIP is a last resort for motorists, and faciliates insurance for more than 90,000 high risk drivers to insurers every year.
When motorists enroll in the New York Automobile Insurance Plan, they are placed in a residual pool, and then randomly distributed to insurance companies based on a quota system. Every insurer authorized to write auto insurance in New York must participate in the NYAIP and provide coverage to a certain amount of motorists in the residual pool based on their market share. For example, if GEICO has 15% of the New York auto insurance market share, that means that 15% of the high risk drivers in the residual pool will be assigned to GEICO.
NYAIP Coverage and Premiums
Your assigned insurer is required to provide you with the minimum liability, no-fault, and uninsured coverages required by Article 53 of New York Insurance law. Additionally, your assigned insurer must offer you the option of purchasing higher amounts of coverage.
The New York Financial Responsibility Law mandates that all motorists be insured for a minimum of $10,000 for property damage, bodily injury liability of $25,000 per person / $50,000 for the death of a person in an accident, and bodily injury liability of $50,000 per person / $100,000 for the death of two or more people in an accident. For drivers who would like to be even more protected, the NYAIP offers optional higher limits of bodily injury liability up to $250,000/$500,000 and up to $100,000 in property damage liability.
New York Insurance Law requires drivers to purchase uninsured motorists insurance as well as basic personal injury protection (PIP), which is also referred to as no-fault insurance. The NYAIP, like all NY licensed auto insurers, offers drivers basic PIP with a $50,000 limit per accident. If you’d like to purchase more PIP, you can purchase an addition limit of $50,000. You can also purchase optional basic economic loss (OBEL) coverage of $25,000, which is an optional insurance that covers additional injuries or lost salary.
Comprehensive and collision coverage are not required by New York, but you do have the option of purchasing them through the NYAIP. You can get up to $50,000 in physical coverages and choose between several deductible options. Medical payment coverage is also available for purchase.
NYAIP Auto Insurance Rates and Premiums
Premiums will vary for each driver depending on where you live, your age, your driving record, the type of car you drive, your level of coverage, and countless other factors. In 2012, the average NYAIP premium was listed at $2,283 per year. To put it into perspective, the average annual auto insurance premium in New York in 2014 can cost about $1,173. Using these two different averages as benchmarks, NYAIP drivers can pay roughly double the average premium in the regular market in New York.
To be eligible for insurance through the NYAIP, you must certify that you have tried and failed to find auto insurance in the voluntary market in New York, or that you have been unable to find auto insurance with rates lower than those offered under the NYAIP, within the last sixty days.
Your assigned insurer must continue to insure you for at least 3 years. If you are able to find an insurer in the voluntary market that will offer you coverage, you can cancel your NYAIP policy at any time for no charge. At the end of the 3 years, if you are still unable to find coverage in the voluntary market, you can reenter the NYAIP residual pool and be reassigned to another insurer. Another possibility at the end of the 3 years is that your insurer could rewrite your policy in the voluntary market. For example, if State Farm is your assigned insurer through NYAIP for those 3 years, and you have been evaluated as a safer driver, State Farm could offer to insure you outside of the NYAIP program.
Because high risk drivers are more likely to incur losses and expenses, rates written for those who enter the residual pool in the NYAIP tend to be significantly higher than the same policies in the voluntary market. If you find the NYAIP to be too expensive, and you have exhausted your options in the voluntary market, it will be best for you to enroll in the NYAIP for a short time while you make efforts to become a safer driver and improve your driving record.
How to Get Insurance through NYAIP
To get a quote for the NYAIP, call their number at (212) 943-5100 to be put in touch with a local agent.
For more information about how to apply to the NYAIP, visit their website here: https://www.aipso.com/PlanSites/NewYork.aspx.