Residual Automobile Insurance Market
What Does Residual Automobile Insurance Market Mean?
The residual automobile insurance market, also known as the shared market, is an option for individuals who are unable to obtain standard automobile insurance because they or their vehicle are classified as high-risk by state insurance regulators.
Insuranceopedia Explains Residual Automobile Insurance Market
There are several reasons a person might be denied a car insurance policy from private insurance companies. These can include a history of car accidents, multiple driving violations, or insufficient driving experience. If denied coverage, their final option is the residual market for automobile insurance. Due to the high-risk nature of these policies, insurers in this market typically charge higher premiums than standard car insurance.
However, drivers who rely on the residual market can still transition to regular car insurance over time. One way to do this is by maintaining a clean driving record for several years, which may lead regulators to no longer classify them as high-risk.
