What to Do if You're Denied Auto Insurance (And Why You Were Denied)

What to Do if You're Denied Auto Insurance (And Why You Were Denied)

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Car insurance companies may deny you coverage for a number of reasons, from your driving history to the type of car you own. They may also decide not to renew an existing policy for the same reasons.

If you're denied car insurance coverage, the best option in the short term is to look for an alternative provider, such as from a company that provides non-standard or high-risk insurance policies. But in the long term, you should try to determine why an insurance company is denying you coverage, then solve or remediate the problem.

Reasons why your auto insurance application may be denied

Car insurance companies are more likely to deny insurance to people they believe are more likely to file a claim. Insurance companies frequently deny coverage if the applicant has a recent history of accidents, a series of minor traffic tickets or a serious infraction such as a DUI. These are strong indicators of a risky driver who may cause a car accident and submit a claim.

The reason you're denied coverage can also be less obvious, or it can be a combination of factors. For example, a teenager who is already considered a high-risk driver may be denied coverage for having one speeding ticket, while a 30-year-old may not be. Some insurance companies also base your eligibility in part on your credit-based insurance (CBI) score, so if you have unpaid bills, you may find it difficult to get car insurance.

You might be denied car insurance if you:

  • Have too many moving violations.
  • Have too many at-fault accidents.
  • Are too old or young (unless you're in a state where age-based insurance decisions are prohibited).
  • Have a poor CBI score.
  • Own a fast or expensive car.
  • Live out of the insurer's coverage area.

Car insurance companies can deny you coverage for any reason except those explicitly forbidden by law, but the exact laws vary by state. For example, insurers in Montana can't make insurance decisions based on your gender. Typically, laws are concerned with higher rates, not outright denials, but it may be worth confirming that the reason your policy was denied wasn't in violation of the law.

Car insurance companies don't always tell you why your application was denied, especially if you're filling out an online application. You may need to contact the company directly or speak with an insurance agent to find out what happened.

What to do when you can't get a car insurance quote

If you're denied a quote from an insurance company, apply for quotes from several other insurers. Insurance companies each evaluate applications differently, so one may give you a quote while another will not. Working with an insurance agent can also make things easier in this case, as they can submit your application to several insurance companies at one time.

High-risk insurers

If you've checked with all the low-cost car insurance companies near you, you may find better luck going with a high-risk car insurance company, also called a non-standard insurer.

These companies specialize in providing insurance to drivers with poor driving histories. Unfortunately, high-risk insurers typically charge more than standard auto insurers, so you may find that your rates increase significantly.

>> OTHER RESOURCES: Best car insurance companies for high-risk drivers

Get added to a family member's policy

You may also add yourself to another person's policy, such as a family member or roommate. However, it's imperative that you and the person who owns the policy trust one another, as you'll both be on the hook for each other's driving. If you or the policyowner get into an accident, then you'll both likely have to pay more.

Car insurance companies generally only let you share an insurance policy with someone you live with, or sometimes with a direct family member who doesn't live with you. For example, you can usually add yourself to your parents' insurance if you're in college.

Long-term solutions to a rejected car insurance application

If you were denied a car insurance quote for an issue you can control, it's likely to your benefit to resolve or minimize the issue. Things like speeding tickets and unpaid bills may lead to either a rejected application or a higher insurance bill. We highly recommend you address these issues to find the cheapest prices for car insurance and make getting a quote easier.

Improve your driving record

If you're struggling to get an affordable quote because of driving violations, take a defensive driving course. This will usually reduce the number of points or infractions on your license, and you may also qualify for an automatic discount on your monthly insurance rates.

You may also be able to have an older speeding ticket removed or expunged from your record, which can make it easier to get a quote. Unfortunately, drivers with multiple or serious driving violations — those who are most likely to be denied coverage — typically can't get tickets removed. In states where getting a ticket expunged is an option, it's usually reserved for people who made a one-time mistake and haven't had repeated incidents.

Fix your credit

If you're having trouble getting car insurance due to your credit, it's worth taking the steps to repair your credit. CBI scores are used in most states to set insurance rates. They're calculated differently from regular credit scores, but they're based on the same information — and you boost both the same way. Pay your bills on time, dispute errors and reduce your credit utilization ratio by paying off debt.

Repairing your credit usually isn't a quick process, but doing so can substantially impact your ability to qualify for car insurance, loans and credit cards.

Address other factors

Keep in mind other aspects about you that aren't strictly negative but can nevertheless affect your car insurance eligibility, and make adjustments to your lifestyle if you can. For example, a fast, dangerous car can be hard to insure. It may be less fun to drive, but a safe, sensible car can save you a lot of money on your insurance bill.

And if you're thinking of moving in the near future, it may be worth keeping car insurance rates in mind. Try getting a quote for your new address before you commit so that you can understand how your car insurance rates may be affected.

Check back often for cheaper rates

Finally, it's an excellent idea to periodically check with other insurance companies to see if they have changed their criteria or are offering you better rates — every six to 12 months, especially if you have a recent ticket or accident. The more time that passes after an incident, the less it will impact your insurance. So you are likely to see a lower quote two years after your last ticket than immediately afterward.

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