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Can car insurance companies deny coverage? Yes, and for many different reasons. While you may not immediately know the reason for denial, you may 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 may 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. Also, drivers under 18 typically don’t qualify for their own car insurance policy and instead must be listed on their parents’ or other family member’s policy. Each state may have different criteria for why an insurance carrier is allowed to deny coverage. Some state laws prohibit 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 application denied for a variety of reasons, many of which are tied 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 to buy your own insurance policy
- You live in an area with a high number of vandalism incidents 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 may be serious financial and legal consequences for not having coverage.
If you find your car insurance coverage denied by a standard carrier, you might want to contact high-risk insurance companies. High-risk insurance companies have different underwriting guidelines, and while they may not be the cheapest option, you might be more likely to get approved for coverage.
You could also consider asking a family member to add you as a driver to their policy, but this may only be an option if you live with them. However, depending on your relationship, you might not be able to add your vehicle to their policy (especially if you’re the sole owner). There’s also no guarantee that you will meet your family member’s carrier’s underwriting guidelines. If you don’t, it may also deny you coverage.
Carriers that may extend coverage to high-risk drivers
If you’ve been denied coverage from several carriers, you may need to seek other options. Fortunately, several national carriers may be more willing to extend coverage to high-risk drivers.
According to premium data from analytics company Quadrant Information Services, State Farm offers some of the lowest average rates for drivers with a single speeding ticket or at-fault accident of all the carriers our insurance experts have analyzed. Additionally, State Farm’s Drive Safe and Save telematics program may serve as positive reinforcement if you’re working on improving your driving record. Although the carrier is not a traditional high-risk insurer, these factors helped State Farm win the 2023 Bankrate Award for Best Auto Insurance Company for High-Risk Drivers.
If you’re looking for incentives to improve your driving record, Allstate may be another good option. The carrier’s Safe Driving Bonus may reward you with a check or credit to your insurance policy for every six months without an accident. The carrier also offers a robust telematics program, Drivewise, that may lower your rate for passing safe driving challenges. Unlike some other high-risk auto insurance companies, Allstate offers a fairly comprehensive list of endorsements that may appeal to drivers looking to customize their coverage.
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 SR-22 filing. As a high-risk insurance company, average rates with The General may be high for drivers with multiple incidents on their driving record or other high-risk rating factors. However, you may be able to lower your rate with potential discounts for taking a defensive driving course, being a good student, owning a home and more.
How to avoid being denied car insurance coverage
If you’ve been denied auto insurance coverage or worry you may be in the near future, there are a few steps that may improve your prospects of finding a policy in the future.
Maintain safe driving habits
Although car insurance companies review several personal rating factors to determine if you meet their underwriting guidelines, your driving history may be one of the most significant factors for many carriers. Avoiding speeding tickets, accidents and other moving violations may demonstrate to carriers that you are a safe driver and less likely to file a claim. After a few years of safe driving, you may find it easier to get coverage at an affordable rate.
Enroll in a defensive driving course
Enrolling in a defensive driving course may help you qualify for a discount with certain insurance carriers. Additionally, the skills you learn may help you become a safer driver and avoid incidents, like tickets and accidents, that may cause your premium to increase further.
Improve your credit
Unless you live in California, Hawaii, Massachusetts or Michigan, your credit history can impact your car insurance rates and may even classify you as a high-risk driver. The better your credit history, the less risky the insurance carrier may find you, as drivers with better credit typically file fewer car insurance claims. If you have a poor credit history, improving your credit score by paying bills on time, limiting hard credit checks and keeping your credit utilization ratio low may help bring down your insurance premiums and improve your coverage eligibility.
Consider 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 typically consider to be less of a risk, which may make finding coverage easier.
Frequently asked questions
According to rates gathered by Quadrant Information Services, the national average cost of car insurance is $2,014 per year for a full coverage policy and $622 for minimum coverage. 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 history could influence your premium.
Some states require drivers to carry an SR-22 — sometimes also known as SR-22 insurance, certificate of financial responsibility or CFR — after an insurance lapse, license suspension or other high-risk driving behavior, like a DUI. An SR-22 certifies that you carry the minimum car insurance coverage required to drive legally in your state. You will receive a letter from your state’s DMV, BMV, Secretary of State or other applicable agency if you are required to carry an SR-22. Insurance companies that offer SR-22 insurance will file an SR-22 on your behalf, usually for a small fee and often electronically. For more information, you may want to contact your insurance agent.
Learn more: SR-22 insurance
Sometimes, but it depends on the circumstances. Drivers under the age of 18 are typically required to be listed on a family member’s policy as they are too young to purchase their own policy. To be listed as a driver on a family member’s policy, you will likely need to regularly operate their vehicle. However, if you don’t meet your family member’s insurance company’s guidelines, it too can decline to cover you.