What is the New York Automobile Insurance Plan (NYAIP)?
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As a no-fault auto insurance state, auto insurance providers are required to cover the cost of medically related injuries and damages that occur in the event of an auto accident, no matter who is responsible for the accident.
The No-Fault Law was enacted in New York in 1974. The purpose is to expedite the compensation injured drivers, passengers, pedestrians, and bicyclists received in the event that they are injured in an accident by delaying lengthy legal proceedings and costs. While the idea behind no-fault auto insurance is certainly a good one, not all drivers will be able to obtain a policy within the voluntary insurance market – particularly if they are high-risk drivers. Why? – Because insurance companies perceive high-risk drivers as a threat, which means that there is an increased risk that the insurer will sustain a loss.
Insurance coverage is a legal requirement in the state of New York. So, what can motorists who are unable to obtain a policy through the voluntary insurance market do to get the coverage they need? – They can apply for coverage through the New York Automobile Insurance Plan (NYAIP).
What is the NYAIP?
The New York Automobile Insurance Plan (NYAIP) was designed to enable individuals who are considered at-risk drivers and are unable to obtain insurance coverage through the voluntary insurance market. Through this program, motorists are assigned an insurance carrier on an involuntary basis.
All insurance companies that operate in the State of New York are required to participate in the NYAIP, and as such, they must provide coverage for the motorists that are assigned to them.
In order to receive coverage via the NYAIP, motorists are required to provide proof that they are not able to receive a policy within the voluntary insurance market, and that proof must be within 60 days of applying. Once coverage is provided through the NYAIP program, insurance providers must cover those that they carry for a minimum of three years.
Who Does the NYAIP Apply To?
There are several reasons why motorists may require help getting insurance coverage under the New York Automobile Insurance Plan. Primarily, these reasons are associated with being classified as a high-risk driver. Should any of the following apply to a motorist, insurance companies will more than likely view them as a high-risk:
- A history of several traffic infractions
- Multiple accidents
- Frequent filing of claims
Drivers that any of the above apply to are considered high-risk because there is a greater chance that the insurance company will suffer a loss for insuring them. In other words, they will more likely have to pay out claims that are filed against the driver, which results in a loss of profit for insurance companies.
How the NY Auto Insurance Plan Works
As mentioned, motorists are required to provide proof that they are unable to receive coverage in the voluntary market for the past 60 days. Upon providing such proof, they will be enrolled in the New York Automobile Insurance Plan, which places them in a pool. Those who are in this pool are distributed to insurance providers at random according to a quota system.
Also as state law, all insurance companies that operate in the State of New York are legally obligated to participate in the NYAIP program. They are also required to offer coverage to a specific amount of drivers within the residual pool, as per their market share. For instance, if State Farm has 10 percent of the market share in New York, 10 percent of the NYAIP residual pool will be assigned to the company.
New York Automobile Insurance Plan Coverage and Premiums
It is important that motorists understand that insurance coverage under the New York Automobile Insurance Plan is usually more expensive than policies that are offered in the open insurance market. That’s because it costs insurance providers significantly more money to cover these at-risk motorists. As such, drivers should consider getting insurance through the NYAIP a last resort.
Insurance companies must provide those that they cover under the NYAIP program with the minimum coverage limits that are mandated by the State of New York. Therefore, under this program, coverage includes:
- A minimum of $10,000 for property damage
- A minimum of $25,000 for bodily injury for an individual
- A minimum of $50,000 for the death of an individual
- A minimum of $50,000 for bodily injury of two or more people
- A minimum of $100,000 for the death of two or more people
The premiums under the NY Auto Insurance Plan will vary for every driver. Several factors are taken into consideration when determining premiums, including:
- Your age
- Where you reside
- Your driving history
- The type of vehicle you drive
- The type of coverage you require or would like
With that said, on average, drivers can expect to pay double the amount for insurance under the NYAIP program than they would with a policy in the voluntary insurance market.