What To Do If An Auto Insurance Company Denies Coverage
Nearly every state requires drivers to have some form of financial responsibility to ensure the ability to pay for certain costs associated with traffic accidents.
The most common way to establish financial responsibility is by having car insurance coverage. But what if you are denied?
Read more to learn about how you can obtain the necessary car insurance if multiple auto insurance companies have denied you coverage.
Reasons for Denial
Car insurance companies have the right to deny auto insurance coverage to people they consider high-risk drivers.
There are a number of reasons you might be considered high-risk. Some of these reasons include:
- DUI/DWI conviction or other serious traffic violations.
- Having a serious and/or injury-causing accident.
- Having several traffic violations on your driving record.
- Having poor credit.
- Possessing a history of insurance violations, including lapses in car insurance coverage.
- Owning a high-performance car.
Purchasing Car Insurance After Denial
Because almost all states have car insurance requirements, chances are you need to carry at least the minimum state coverages and limits on your policy. Being denied car insurance coverage is not a valid excuse to drive uninsured.
Fortunately, you have options if you've previously been denied coverage.
The first thing you should do if an auto insurance company denies you coverage is to continue shopping. While one company may deny you coverage, another company may be happy to provide you with car insurance.
Get multiple car insurance quotes to increase your chance of getting coverage at a reasonable rate.
NOTE: If you've been denied by three or more car insurance providers, it may be time to look at high-risk auto insurance (see below).
High-Risk Car Insurance
Car insurance is typically sold in different tiers. If a car insurance company denies you coverage, they are likely denying you in the standard tier. There is, however, a high-risk auto insurance tier where you may be able to find coverage.
Many car insurance companies work in both tiers, while some companies specialize in selling high-risk auto insurance. Keep in mind that premium rates in the high-risk tier of car insurance are generally considerably higher than standard rates.
As with standard car insurance, high-risk car insurance can be easy to find online. Make sure to get multiple quotes to ensure you get the most affordable car insurance you can find as a high-risk driver.
State Automobile Insurance Plans
If you continue to have difficulty finding car insurance even after looking in the high-risk market, you still have hope.
To combat the fact that car insurance companies have the option to deny coverage to some drivers, all states that legally mandate limits of car insurance have programs to assist drivers with getting the required amounts of auto insurance.
These programs typically come in the form of an automobile insurance plan or an assigned-risk plan. Note that to participate in one of these plans, there may be state requirements regarding how many times you've applied for car insurance. For example, you may have to have been denied car insurance coverage by at least three providers before applying.
Through a state's automobile insurance plan, your risk is shared between the participating insurance companies.
Through an assigned-risk plan, you are assigned to a car insurance company that will provide you with your needed car insurance coverage.
Generally, all companies that offer car insurance in a given state are required to participate in that state's plan. You can apply to a state plan through most auto insurance agents licensed to do business in that state.
Reducing Your Risk
The best way to avoid being denied car insurance is by reducing the risk you present to a car insurance company.
You can reduce your risk rating by:
- Taking a defensive driving course.
- Avoiding traffic violations and accidents.
- Repairing your credit.
- Buying a safe and moderately priced car.
Remember, even if you currently have to obtain high-risk car insurance, or auto insurance through a state plan, you may not have to do so in the future.
Continue working to improve your risk rating, and you may soon re-enter the standard tier. Once you've returned to the standard tier, it will be easier to find cheaper car insurance.