Insurance companies often have a certain criteria or requirements that people must fulfill before they can avail of insurance. However, some people do not meet the requirements and fail to obtain insurance through the usual means. When this occurs, the person is referred to as an assigned risk, since he or she does not meet the criteria but cannot be denied insurance coverage.
A more specific definition of an assigned risk refers to a certain class of drivers who would not be covered by insurance companies, but are required to be insured by virtue of state laws. People who are placed under the category of assigned risk may have histories of major car accidents, numerous speeding or traffic tickets, or demerit points if it applies. Because of the high risk this individuals have, most insurance companies refuse to provide them with any kind of insurance coverage. However, such drivers are required by law to be insured before any kind of driving is to be done. Thus, insurance companies have provided a different mode of obtaining insurance to people who qualify as assigned risk.
Assigned risk may also apply to workers whose work places are hazardous or harmful in some way. Because of the danger associated with these people’s profession, they are also categorized as assign risk. Despite this, insurance companies must also provide some form of insurance to such individuals. This may also apply to businesses that continue to suffer losses, and become unviable prospects or an assigned risk for insurance companies.