What Does Residual Automobile Insurance Market Mean?
The residual automobile insurance market (also known as the shared market) is the buying option for a person who cannot buy a standard automobile insurance because they or their automobile is classified as too high a 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. They might, for instance, have an outstanding record of car accidents and driving violations or too little experience behind the wheel. If they are denied coverage, their last option is the residual market for automobile insurance. Because of the high risk they cover, these insurers charge a higher premium than regular car insurance.
Even drivers who must have recourse to the residual market may still eventually get regular car insurance. One way of doing so is for the policyholder to have a clean driving record for a number of years, at which point the regulators might no longer classify them as a high insurance risk.