We often get asked why the down payment is higher on financing assigned risk commercial auto policies. The issue with an assigned risk policy is that it’s subject to audit. Unfortunately, many of these audits are done during the policy term resulting in a premium increase. These midterm increases drive the customer to shop their insurance. If they decide to make a change during the term the assigned insurance company will use the audit adjusted premium to calculate the earned premium. When this happens the unearned premium returned to the finance company comes back significantly short of the loan balance. This is why you often see down payments of 35% or more on assigned risk auto policies. Another way the finance company mitigates the risk is to shorten the number of installments from 9 to 7 or 8.
If you need help financing an assigned risk commercial auto policy feel free to reach out. We’ll do whatever we can to help the client with the most flexible payment plan possible.