An Overview of § 1742 under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL)

Section 1742 of Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) sets out the scope of the Assigned Risk Plan, providing directives for classifying risks, determining rates, installment payment of premiums, apportioning clean risks among insurers, and other conditions
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Statutory Text

§ 1742. Scope of plan.

The Assigned Risk Plan shall:

(1) Include rules for the classification of risks and rates therefor.

(2) Provide for the installment payment of premiums subject to customary terms and conditions.

(3) Provide rules for the equitable apportionment among participating insurers of clean risks who shall be eligible to receive the insurer's voluntary rate.

(4) Provide rules to specify the effective date and time of coverage, provided that applicants may only obtain coverage effective as of the date and time of the application if the agent or broker of record uses electronic mail binding procedures specified in the rules.

Key Term Definitions

Assigned Risk Plan:

This is a program to ensure those who cannot secure motor vehicle insurance through the regular market due to their high-risk profile can still obtain coverage. Under this scheme, insurance carriers are obliged to guarantee protection to these individuals.

"Classification of risks and rates therefor":

This involves categorizing drivers based on certain risk factors and establishing their insurance premiums accordingly. Factors can include the motorist's age, vehicle type, driving record, and other relevant components.

“Equitable apportionment among participating insurers of clean risks”:

This refers to the fair allocation of drivers who pose no or minimal risk to the insurers participating in the Assigned Risk Plan.

“The insurer’s voluntary rate”:

A price set by an insurance company that they are willing to accept for insuring a particular risk without compulsion by the state.

"Electronic mail binding procedures":

These are protocols that allow insurance coverage to become effective from the date and time of the application if the application is done via email.

Importance of this Section for Pennsylvanian Drivers

The outlined provisions in § 1742 ensure that all drivers have access to auto insurance coverage. It allows high-risk drivers to secure insurance through the Assigned Risk Plan, providing protection and fulfilling the legal requirement for insured driving in Pennsylvania. The rules herein ensure premiums are calculated equitably, based on specific classifications of risk. Moreover, the allowance for the installment payment of premiums boosts affordability. Lastly, the provision for electronic mail binding procedures facilitates immediate coverage upon application, offering convenience and immediate protection against liability.

Importance of this Section for Pennsylvania Attorneys

Understanding § 1742 is critical for attorneys to advise and represent their clients effectively in automobile-related insurance cases. The comprehension of specific terms - such as Assigned Risk Plan, risk classification, and equitable apportionment - is vital when dealing with cases involving high-risk clients struggling to get coverage in the regular insurance market. Furthermore, being conversant with the installment payment system and the effective date of coverage aids in providing accurate legal advice and ensuring the rights of their clients are protected.

Advanced Language Analysis

§ 1742 has carefully inclusive language ensuring broad coverage of the various facets pertaining to the Assigned Risk Plan. This is seen in the phraseology "classification of risks and rates therefor," demonstrating a thorough consideration of insurance dynamics. The statutory language "equitable apportionment among participating insurers of clean risks" underscores the law’s commitment to fairness.

Intricate terms like "insurer’s voluntary rate" and "electronic mail binding procedures" reveal precise legislative drafting, minimizing ambiguity in insurance transactions. By stipulating specific terms and conditions, the section exhibits legal maximalism, precluding possible disputes over unclear policy rules, thereby promoting clarity and certainty in the auto insurance market.

About the author
Von Wooding

Von Wooding

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