You might think that a car insurance company serves you and makes money on every driver, so they would not pass on business. In some circumstances, however, the risk is too high, and they decide not to take you on as a client. If you are wondering can a car insurance company deny coverage, the answer is yes. There are certain circumstances that give them enough reason not to insure you.
Can a Car Insurance Company Deny You Coverage?
It is the company’s right to deny you coverage if they think that you are not honest or you are a high-risk driver. However, they will need to let you know about their decision and give you enough time to arrange alternative coverage.
Car Insurance Claim Rejection and Denying Coverage
There is a difference between rejecting your claim and denying your coverage. Your car insurance company might decide not to insure you in the beginning, or they could part ways after you make an expensive claim. Finally, when your policy comes up for renewal, they can decide not to continue insuring you based on your behavior behind the wheels.
You need to know that the company is not always going to give you a clear reason why they refused to insure you. If you cannot see an obvious reason, such as a DUI or a claim, you can decide to ask for a written explanation. ValuePenguin provides a complete guide on what to do when your car insurance company decides not to insure you anymore.
You might also file a complaint if you don’t feel like the company followed the law and they made a mistake. All insurance companies are regulated by the relevant department of the state, and these agencies offer mediation and dispute resolution programs. If you don’t get anywhere using this channel, you can also take legal action against the company if you can prove that you suffered significant loss.
Why Would a Company Refuse to Insure You?
There are certain reasons why your car insurance company might deny coverage, including:
- You exceed the policy limits.
- You break the law while driving.
- Not being honest on your car insurance application.
- Making fraudulent claims.
- Too many claims.
- Your car is too expensive to insure.
There are, however, some exclusions. It is illegal for insurance companies to deny you coverage based on various reasons defined by the state. For example, in Montana, it is against the law to discriminate based on gender when it comes to car insurance approval or pricing.
Claims Disputes and Refused Coverage
In some cases, the auto insurance company might decide to deny your claim. They might give you a detailed explanation, or they might not. If they don’t, you will have to weigh your options. Is it worth it to dispute the case? How much money you would lose if you had to pay everything out of pocket? If you have a deductible of $500 and the claim is for $650, you might save time and hassle just settling the dispute.
There are certain reasons why an insurance company might refuse to pay out your claim or renew your policy, according to WalletHub. Here are the most common ones:
- You acted negligently and could have avoided the accident.
- Suspected fraud.
- Mistakes or dishonesty on your original car insurance application.
- False reports on your car’s condition or the mileage.
- Not disclosing accidents or damage to the car.
- Too many claims in a short period of time.
- Too many speeding tickets.
- Bad credit rating and nonpayment.
- Letting your policy lapse.
- Too many road traffic violations.
You might feel like it is unfair for the company to deny your claim or renewal, but they make decisions based on your risk level. You cannot force them to take on a risk they are not prepared to take on. Just part ways and find an alternative company that is prepared to provide you with the right coverage. Read our tips on how to shop for the right car insurance.
How to Avoid Getting Your Car Insurance Denied
No matter what happens, even if it is a parking ticket, you should report it to the company immediately. The insurance company expects complete honesty.
Likewise, if you have a minor accident — even if you don’t want to make a claim — you should let the company know.
If you move or your personal circumstances change, you should always let the company know. If they think that you are storing the car in a safe garage in a low crime area and it gets damaged in another home or on the road, you can expect your claim to be denied.
You should also seek medical attention after the accident. It is important that there is a trace of you being involved in the accident if you are claiming that you are injured. Otherwise, the insurance company might become suspicious that you are filing injury claims unrelated to the accident.
Who Regulates Car Insurance Companies and Where to Complain
Car insurance companies are regulated on a state level. However, you should always try to resolve the dispute with the company’s representative before submitting a formal complaint. Once it is clear that you are not getting anywhere, you will need to send in a formal complaint.
Ask the company for their complaint policies, so you know how long they have to reply and what your rights are.
If your complaint is not resolved by the company, you might contact the state department’s agency to get help. They will first try to resolve the issue by mediation and then will negotiate different solutions.
Getting your car insurance coverage denied is not the end of the world. You can get another company to take you on as a client. Still, you should find out as much as you can about the reason for denying the policy, so you can be careful in the future not to do anything that would make insurance companies feel nervous about providing you coverage.
Check this out if you need additional information, resources, or guidance on car insurance.
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