Can insurance companies deny coverage?

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If you are wondering, “Can car insurance companies deny coverage?” then the answer is yes, although there may be many different reasons this happens. While you may not immediately know the reason for denial, you do have options if it happens to you. Whether the carrier has chosen not to renew your current policy or your insurance application is denied, understanding your short-term and long-term options should help you find the coverage you need.

Can car insurance companies deny coverage?

A car insurance company can deny coverage for almost any reason. An insurer might deny coverage to a driver who it believes poses a higher risk and is more likely to file a claim. Additionally, each state may have different criteria for why an insurance carrier is allowed to deny coverage. Some states have even passed laws forbidding basing coverage eligibility or premiums on age, credit, gender, ZIP codes and other factors.

Reasons you may be denied car insurance

You may have your insurance denied for a variety of reasons, many of which tie to personal factors:

  • You have several moving violations and a less than perfect driving record
  • Your license has been suspended or revoked
  • You drive a fast, high-performance vehicle
  • You are too young for a policy
  • You live in an area with a high number of vandalism and car thefts
  • You have a lapse in coverage
  • You lack a previous insurance record

What do I do if I am denied coverage?

Almost every state requires drivers to carry a minimum amount of insurance to legally drive. Even if you are denied coverage through traditional insurance options, you are still expected to find and purchase at least minimum coverage through a provider, such as a high-risk insurer. If you are involved in an accident or caught driving without insurance, there are serious financial and legal consequences for not having coverage.

Multiple insurance companies denying coverage may be a reason to seek other options, like high-risk auto insurance. Fortunately, several national carriers offer this option and may have one you can take advantage of.

Allstate

Allstate is well-known for its accident forgiveness program. It also offers the Safe Driving Bonus program, which could earn you credits towards premiums for staying accident-free every six months. The Drivewise app tracks your driving habits and activity and may reward you for safe driving.

The General

The General is a national insurance provider that specializes in coverage for high-risk drivers. The General also offers quotes and possible coverage for drivers who need an SR-22 filed. Certain states require SR-22 forms to prove required minimum limits of coverage, especially for those who have had their license suspended or revoked.

Nationwide

Bankrate’s 2021 analysis of premiums found Nationwide to offer competitive rates, even for drivers who have less-than-perfect credit. Nationwide also offers several discounts for further savings, such as remaining accident-free, taking a defensive driving course and signing up for Easy Pay.

Can I get added to a family member’s policy?

It is possible to be added to a family member’s policy or even your roommate’s. Most insurers either look for applicants to be immediate family members or living in the same household. Getting added to a family member’s policy may sound like a simple solution to not being able to obtain coverage on your own, but keep in mind it will most likely increase the policyholder’s premium.

Long-term solutions

Getting added to a family member’s policy may provide a short-term solution, but there are other tactics you can use over a longer period of time to increase your chances of getting traditional insurance.

Enroll in a defensive driving course

Enrolling in a defensive driving course generally has two benefits. First, most states operate under a point system for moving violations, where each violation racks up demerit points. Your state may allow you to take an approved defensive driving course to lower your number of points. This could also help you qualify for a discount with insurance carriers and ultimately lower your premiums.

Improve your credit

Improving credit may not be synonymous with better insurance rates, but the two go hand in hand in many states — excluding California, Hawaii, Massachusetts, Michigan and Washington. The higher your credit score, the less risky the insurance carrier may find you. Start by requesting a copy of your credit report and checking for accuracy. Dispute any errors you may find. You are entitled to a free credit report each year via one of the three credit bureaus, at which time you can also view your credit score.

Once you understand your credit score and report, you can work on paying each of your bills on time and paying down overall debt to begin improving your score. Not only does credit improvement help with auto insurance, but it could also improve your interest rates for vehicle loans, mortgages and other financial products.

Periodically compare coverage from providers

One of the most effective strategies for improving chances of finding coverage is allowing enough time to pass between reapplying for quotes. The longer it’s been since your last moving violation or at-fault accident, for example, the less difficulty you are likely to have when looking for standard coverage.

Purchase a more sensible vehicle

If your coverage was denied because the vehicle you drive is considered too risky, it might be worth considering a safer option. There are numerous vehicles that insurance carriers consider to be less of a risk, which could make finding coverage easier.

Frequently asked questions

What is the average cost of insurance?

According to rates gathered by Quadrant Information Services, the national average cost of insurance is $1,674 per year for a full coverage policy. However, exact premiums are highly dependent on personal factors. Depending on your state and the factors it allows for insurance underwriting, your ZIP code, age, gender, vehicle, driving history or credit score could influence your premium.

How do I find the best rates for premiums?

Finding the best coverage for the right cost is easier when you compare several insurance carriers. Not only will it help determine which company offers the lowest rates, but you can also check which discount and coverage options are available.

How much does it cost to obtain an SR-22?

Each state has a different cost for filing an SR-22 form, but the average cost is about $25 for the form. An SR-22 form is typically needed every year for three years. As a high-risk driver in need of an SR-22, you should prepare to pay higher premiums overall for high-risk insurance, although working toward safe driving habits could reduce your risk over time.

Written by
Sara Coleman
Insurance Contributor
Sara Coleman has three years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, Reviews.com, Coverage.com and numerous other personal finance sites. She writes about insurance products such as auto, homeowners, renters and disability.
Edited by
Insurance Editor