What is an Assessable Policy?

An assessable policy is a certain type of car insurance policy in which you may be facing additional charges on your annual premium if the company you have insured under has a bad year with several claims. Essentially, you could be punished with higher rates just because other drivers insuring with the same company as you have been in car accidents. Most car insurance policies these days are non-assessable policies; however, there are still some companies that offer an assessable policy to willing drivers.

How Assessable Policies Work

Assessable policies protect the insurance agency more than the driver. If the insurance agency is in the red after a bad year, then assessable policies give the provide permission to take this money from their customers. You may wonder why anyone in their right mind would choose to insure under an assessable personal vehicle policy. After all, why pay for someone else’s negligence on the road?

Assessable policies may be a cheaper option than standard non-assessable policies. However, you are risking a higher cost at the end of the year depending on how the other drivers perform. Assessable policies group all their drivers together. You are working as a team to keep your premiums low. A good year on the road with little claims in general means lower premium for your ‘team.’ A poor year with thefts, accidents and other claims equates to excess costs for everyone.

Assessable Versus Non Assessable Policies

If you are looking into an assessable policy for your auto insurance you want to consider your risk level as well as the other drivers that will likely be insuring with the same company. If, for example, you are insuring with a company that specializes in high risk drivers (under 21’s, performance cars, etc), then there is a good chance that you will be paying an additional amount each year. If you are insuring with a small town company that offers protection to drivers in your rural community, then the risk of accidents is greatly reduced and thus so is the risk of having to pay more with as assessable policy. This is only one of the many things you should consider when determining whether an assessable policy is right for you.

Assessable policies exist for all different types of insurance, including homeowner insurance. If, for example, your state faces a serious natural disaster and you are under an assessable policy, you can expect to pay more even if you do not suffer individual damage. If you live in a high crime area where grand theft auto is quite common, then you can expect to suffer under an assessable policy. This is most likely true if you live in an area where car accidents are very common, where road conditions are poor and where storm damage and other vehicle damage is frequent.

In general, most drivers will steer clear of assessable policies. If you fit into this category then you should always look for a ‘non assessable’ policy. If you are willing to take the risk and want to save a few extra bucks on your policy, then choosing as assessable policy is one of the ways to do this. Alternatively, you can also save on your annual car insurance by opting for a higher deductible, by choosing lower limits and by shopping around and comparing price quotes before you buy. All of these options will also save you a small fortune on your car insurance and you will not be punished with excess costs at the end of the year.

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