Insurer Of Last Resort

What Does Insurer Of Last Resort Mean?

An insurer of last resort is an insurance company that provides a policy to a party considered to be an extremely high insurance risk. Since these applicants are deemed uninsurable by most insurers, they are unable to obtain an insurance policy to cover their risks, especially not at competitive market rates.

Insuranceopedia Explains Insurer Of Last Resort

Insurers of last resort can be private insurance companies that choose to take on heavy insurance risks, often at elevated premiums. For example, they may issue auto insurance coverage to drivers with extremely poor driving records. Drivers in this category often need to file an SR-22 form with their state and pay much higher rates than the average policyholder. However, insurers of last resort are often government entities assigned to protect the interests of populations considered uninsurable, such as individuals with serious pre-existing medical conditions or homeowners living in flood zones. Homeowners who can’t get a standard policy because of their location or claims history may end up shopping for high-risk homeowners insurance, which is usually more expensive and more limited in what it covers.