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While almost every state in the country mandates that drivers carry some form of car insurance, it can be challenging to qualify for a policy if you have a bad driving record. However, you do have options if a provider denies you coverage.
Why An Insurance Company Might Deny You Coverage
Car insurance companies can deny coverage for several reasons, including a driver’s history or the type of vehicle a driver owns. If you’re a current customer, your insurance provider might refuse to renew your policy for the same reasons. If a provider denies you coverage, you should apply for coverage from an alternative provider that specializes in nonstandard or high-risk insurance.
As ValuePenguin points out, an insurance company is more likely to deny you coverage if they think you’re a driver who will file a lot of claims. If you’ve recently had an accident, have a recent string of traffic tickets, or have a major violation such as a DUI on your record, a provider will consider you to be a risk to insure.
Other reasons for a provider to deny you coverage might seem less obvious. For example, an insurance company is more likely to deny a teenage driver with only one speeding ticket on their record. However, they’ll insure a 30-year-old driver with the same record. That’s because providers classify teen drivers as higher-risk overall. Some providers also deny coverage to drivers with poor credit scores, so if you have any unpaid bills, you might not qualify for a policy.
According to the Insurance Information Institute, these are the most common reasons for an insurance company to deny someone coverage:
- Spotty driving history: Insurance companies are likely to deny drivers with a history of DUIs and other violations. Even if you do qualify for a policy, you can expect to pay higher rates than drivers with a clean record.
- No driving experience: This is a common reason for providers to deny teen drivers coverage.
- No insurance history: Providers consider you to be an unknown risk if you haven’t owned a car for very long or have gaps in your coverage.
- Bad credit rating: Insurance companies use credit reports to determine risk because the data shows that drivers with low credit scores tend to file more claims.
- Location: If you live in an area with high rates of auto theft and vandalism, providers may decide that it’s not worth the risk to provide you with coverage.
- Vehicle: Classic cars, custom cars, and high-performance vehicles require special insurance that some traditional insurers don’t offer.
While restrictions may vary by state, according to QuoteWizard, you can’t be denied auto insurance for the following reasons:
- Marital status
- Sexual orientation
If you believe that you’re being denied auto insurance for an unlawful reason, you can file a complaint with your state’s insurance commissioner.
Car Insurance Cancellation and Nonrenewal
As QuoteWizard notes, when you buy an insurance policy, your provider can cancel your policy for any lawful reason for up to 60 days after purchase. After those 60 days, your provider can only cancel your policy for the following reasons:
- Fraud. If you provide false information when applying for a policy or file a false claim, your provider will probably cancel your policy.
- Late payments or missed payments
- Driver’s license suspension
After a cancellation, other providers may be unwilling to provide you with coverage. QuoteWizard suggests that you consider purchasing high-risk insurance, which can cost up to five times as much as standard insurance.
If you’re a current customer and your policy is up for renewal, your company may refuse to renew your policy for the following reasons:
- You’ve filed multiple claims
- Business reasons, such as the company is no longer providing your type of coverage
- You’ve moved to a state that your provider does not operate in
QuoteWizard points out that it’s usually easier to get a new insurance company after a nonrenewal than after a cancellation. Most states require your provider to give you at least one month’s notice if they decide not to renew your policy, so you have plenty of time to find new coverage.
Alternative Auto Insurance Options
If one insurance company denies you coverage, move on and apply with another provider. However, if multiple companies deny you a policy, InsuranceHub recommends that you consider the following options:
- Sign up for your state’s risk pool. Many insurance companies participate in state risk pools. The state assigns a pool of drivers to a particular provider, and the provider has to qualify every driver in that pool for coverage. A risk pool premium costs much more than a traditional premium, but you’re guaranteed coverage regardless of your driving record. Contact your state’s insurance department if you want to sign up for a risk pool.
- Purchase a policy from a company specializing in high-risk drivers. Some insurance companies provide “nonstandard” policies for drivers with spotty driving records, high-performance car owners, and drivers who reside in high-risk neighborhoods. A company specializing in nonstandard policies can often provide you with more comprehensive coverage than your state’s risk pool. Your state’s insurance department can provide you with a list of companies that insure high-risk drivers.
How to Qualify for Traditional Insurance
InsuranceHub points out that signing up for your state’s risk pool or purchasing a nonstandard policy costs you more money and limits your coverage options. However, you can take the following steps to qualify for a traditional insurance policy:
- Reduce your high-risk status. Consider taking a safe driving or defensive driver course.
- Drive safely and follow traffic laws. By driving safely and following traffic laws, you can keep your record clean.
- Never drink and drive. Always make sure you have a designated driver or call a cab if you’re going to drink when you go out.
- Buy a safe car. Insurance companies will consider you less of a risk to insure if you drive a car with lots of safety technology and anti-theft devices.
- Join someone else’s insurance policy. If you’re a teen driver living with your parents, they can add you to their policy, which will help you establish an insurance history.
Keep in mind that even if you qualify for traditional insurance, an insurance company can deny you a policy at their discretion. However, by taking the steps needed to improve your risk status, you’ll decrease the likeliness of being denied a policy and you’ll have more options.
Check this out if you need additional information, resources, or guidance on car insurance.
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