When Insurance Companies Deny Coverage
Nearly every state requires drivers to have car insurance, though obtaining coverage is not always a straightforward process. Auto insurance companies are not required to issue a new policy or renew coverage and can deny coverage for a variety of reasons.
Continue reading to learn about the most common reasons insurance providers deny coverage and the steps you can take to improve your chances for approval.
Reasons Car Insurance Companies Deny Coverage
Insurance companies underwrite policies and evaluate the potential risks based on a number of factors. While companies cannot deny coverage based on your age, gender, marital status, or past criminal record, they can turn you down if you have:
- Too many accidents/insurance claims.
- Several speeding tickets.
- A DUI/DWI conviction.
- An accident resulting in a serious injury.
- Poor credit.
- A history of insurance violations, including lapses in coverage and missed premium payments.
- A high-performance car that has an increased risk of being stolen.
- A residence in a high-crime neighborhood where theft and vandalism are common occurrences.
Depending on your individual circumstance, one or a combination of the factors on this list may cause the insurance company to classify you as a high-risk driver. They may determine that granting you an insurance policy would likely result in frequent or expensive claims.
Steps After a Denial of Coverage
Just because one car insurance company denies you coverage doesn't mean you're out of options — it just means you'll have to take additional steps to find the right policy provider.
Begin by knowing your rights and your driving record. Then, ask the insurance company to explain why you were denied coverage (in writing). If the reason given isn't legal or clear to you, you'll want to take this up with the provider. Challenge any erroneous information, and if you believe you should have been approved, you can file a complaint with your state's insurance commissioner.
Keep in mind, you always have the option of shopping around for a different auto insurance provider. Although one company may not have issued you a policy, another might be willing to provide coverage. Each company has its own methods for evaluating drivers, assessing risks, and determining premium levels.
High-Risk Driver Insurance Programs
If you have tried several traditional insurance companies to no avail, contact an insurer that specializes in issuing SR-22 policies to high-risk drivers. Although mainstream car insurance providers may not sell these types of policies, they may have a subsidiary that do.
A final option is to get insurance by using your state's designated risk pool. After you've been denied coverage several times, the government is required to issue you a policy. The specific number of insurance denials varies by state. The drawback is that these policies carry very high premiums.
Improve Your Record
You should set a goal to resolve the issues that resulted in your classification as a high-risk driver, and therefore denial of a car insurance policy.
In some states, you can attend driving school to reduce the number of points assessed against your license, making you a less-risky driver to auto insurance companies. You can improve your credit score by reducing debt, paying bills on time, and reviewing your credit report for accuracy. You may also consider driving a less expensive car equipped with additional safety features.
Although it may take several years, improving your driving record, credit score, and any other factors contributing to your denial of auto coverage pays off in the long run. The lower risk you present as a driver, the lower your auto insurance premiums will be.