Reasons for Being Refused Auto Insurance

In virtually every state, minimum liability car insurance coverage is a legal requirement to operate a vehicle. However, there are circumstances that can render a driver or vehicle uninsurable. This typically stems from personal details, non-standard application characteristics, the risk associated with the vehicle, or a combination of factors—such as a high-risk driver paired with a high-performance car. While one insurance company declining to provide a quote may not raise significant concerns, if multiple insurers have already rejected coverage, it becomes essential to carefully examine the underlying reasons and explore potential avenues for remediation.

Reasons for Being Denied Car Insurance

There are instances when some insurance carriers might decline to provide coverage for a specific applicant or vehicle. However, it’s often possible to locate an insurer willing to accept the risk. In certain situations, obtaining coverage within the traditional insurance market may not be feasible, but a non-standard insurer might be open to taking on the risk. Typically, the factors listed below can contribute to increased vehicle insurance costs but may not necessarily lead to an outright refusal of coverage. Nevertheless, when two or more of these factors combine, they can lead to denied policy renewals and/or the absence of coverage offers.

  1. Poor driving records is one of the most common reasons for being rejected coverage or dropped by the current insurer. Having at-fault accidents and traffic convictions in your driving record may be enough for companies to refuse to quote. Even a recent DUI on your record alone can put off many companies from offering coverage but there are companies that may insure motorists with a DUI.
  2. Lack of driving experience can put a few companies off, especially if the applicant is a teenager. It can be very expensive but it may be possible to find coverage from other carriers.
  3. Being too young for a policy is a simple enough reason but drivers under the age of 18 may be able to find coverage if their parents’ or guardian agrees to sign for them. Although it can be expensive, people may keep the costs manageable by buying liability-only coverage with an old car.
  4. Bad or No insurance history can be a problem too. Some companies may decide to drop a policyholder after too many missed premium payments and lapses in coverage. Having no insurance history worries a few companies but people have to start from somewhere. They may have to pay higher rates at the beginning but they are likely to find insurance.
  5. Terrible credit scores can put off several carriers and others may quote really high prices. On average the premium difference between excellent and poor credit can be as much as twice according to Consumer Federation of America because people with poor credit are statistically more likely to make claims. And in several states insurers cannot refuse coverage based on credit history or even cannot check credit score.
  6. High-performance, custom-built or classic cars aren’t for every insurer. Some companies may just not offer coverage for such vehicles but there are specialist insurers for such automobiles.
  7. High risk areas can make insurers extra careful. It could be a high crime area with many auto-thefts and vandalism or even a high flood risk zone. Some companies may require alarm or other safety features before they offer a quote while others may reject the applicant altogether.
  8. Unusual risks like seasonal foreign workers with International Drivers Permit may have to find a specialist insurer.
  9. Young driver and high-risk car combination is often a problem. At times, auto insurers may even refuse to add the teen driver to parents’ policy if they have a sports car.
  10. Suspended or revoked driver’s license is a good reason for your current insurer to drop you. You have to wait until your suspension is over to get insured for driving. In the meantime, you may have to consider insuring the car itself without coverage for driving it. Another option is to insure the vehicle with another eligible driver who holds a valid license.

Often motorists with a particular problem that makes them undesirable to some vehicle insurance companies should shop around hard, contact a specialist agent or company and fix one or two issues to get covered at the end.

Solutions to Improve your Risk Profile

Here are some of the solutions that can make you acceptable to at least some automobile insurance companies.

  1. Advanced driving courses can help young drivers and people with high-performance cars to find coverage and lower premiums.
  2. Installing anti-theft devices may be required to reduce risks with some cars and in some zip codes.
  3. Buying a modest car is usually advised if the driver is a teenager. Often, many parents buy cheap and modest cars for their teenagers and get Liability-only coverage for it to get around the very expensive car insurance rates for teenagers.
  4. Bundling can make a risk more acceptable. Usually, it works the other way around and companies become happier to insure a home if they also get to insure the cars belonging to the family as well. But it may work the other way around as well and a carrier may be more reluctant to drop a vehicle insurance policy when they have a bundle.
  5. Finding a non-standard auto insurer can be the immediate solution in most cases. At least high-risk drivers can get covered for now and they can switch to traditional insurers when they build enough insurance and driving history or pass their teen years. And owners of high-risk or unique cars may need to find a company specialized in insuring such vehicles.

If you cannot find vehicle insurance after all your efforts and still want to drive, you will probably have to join your state’s Assigned Risk Pool. Insurers sign up for these pools and accept some of the uninsurable drivers. Auto insurance through assigned risk programs is expensive but this may be the only option for some motorists. You need to ask your agent or contact your state’s insurance department to find out about these programs as they are state specific.

Assigned risk or non-standard insurance arrangements often serve as temporary solutions. Individuals have the opportunity to enhance their driving records, improve their credit scores, and regain eligibility with traditional insurance carriers. It’s crucial for them to continuously monitor their situation and seek insurance quotes at each renewal. This proactive approach can help individuals eventually transition back to standard insurance coverage as they demonstrate improved risk profiles and eligibility.