Can Insurance Companies Deny Coverage for Your Vehicle?

Yes, an insurance company has the right to decline insuring an automobile under certain circumstances. Most insurers have a list of ineligible vehicles, which they have already thoroughly assessed and decided not to provide insurance. They may also turn down insuring unique, heavily modified and high-risk automobiles. Additionally, they may decline to offer insurance coverage to certain high-risk drivers when paired with certain vehicles, although they may still be willing to provide coverage to the high-risk driver with a different car or to standard risk-drivers with the same car. Every car insurance application has to pass an insurability test and some cars may fail you in that test with some insurers. Nevertheless, you may still be able to find coverage from other insurers in your state.

Insurance companies have the discretion to refuse coverage for particular automobiles and drivers based on specific circumstances. However, it is essential for them to ensure that their decisions are not discriminatory, taking into account factors like race, ethnicity, ability, or background of the applicants. Insurers utilize risk assessment guidelines and closely evaluate the potential risks associated with both drivers and vehicles before agreeing to provide insurance coverage. This approach helps them maintain fairness while safeguarding against potential liabilities. Here are some key points to consider:

  1. Ineligible vehicles: Insurance companies often maintain a list of ineligible vehicles that they will not insure. These could be vehicles that are deemed too high-risk, have a history of frequent claims, or are prone to theft. Many of these ineligible vehicles are certain make and model cars, which are typically expensive and difficult to repair. Some of them may also be discontinued models or sold by only a few dealers in the US. Each insurer may have its own set of criteria for determining ineligible vehicles.
  2. Unique and heavily modified vehicles: Insurers may be hesitant to provide coverage for vehicles that have significant modifications or alterations, especially if these modifications increase the risk of accidents or damage. For example, they may refuse to insure if the vehicle has been home converted from its original petrol operation to electric or natural gas.
  3. Car specific risks: Besides certain makes and models, many insurance carriers have strict policies regarding vehicles with a rebuilt title or those that have been involved in significant front-end accidents. In such cases, they may refuse to provide coverage. Additionally, some insurers decline coverage for “kit” cars or homemade vehicles. These vehicles might not meet the safety and quality standards required for insurance coverage, leading insurers to avoid potential risks associated with them. As a result, owners of such vehicles may face challenges finding insurance from traditional carriers and might need to explore alternative options for coverage.
  4. Classic cars: Some insurers don’t accept antique or classic cars but there are many other companies and even specialized insurers in this field. Also, Insurance companies might decline coverage for vehicles that are too old or in poor condition, as they may be more prone to breakdowns or safety issues.
  5. High-risk drivers: Some drivers, due to their driving history, age, or other factors, may be considered high-risk by insurers. In such cases, an insurance company might choose to decline coverage when high-risk drivers are paired with certain vehicles or offer coverage at a higher premium. For example, they often refuse to insure a high-performance car when you want to add a teenage driver to your policy. 
  6. Insurability test: When you apply for auto insurance, the insurer will assess the risk associated with the vehicle and the driver. They may conduct an insurability test based on various factors, such as the driver’s record, the vehicle’s make and model, and its safety features. If the vehicle fails to meet the insurer’s risk tolerance, they may decline coverage.
  7. It’s important to remember that the insurance industry is highly regulated, and insurers must comply with applicable laws and regulations. This means they must justify their risk-based decisions and cannot engage in discriminatory practices.

Just because one insurance company refuses coverage for a specific vehicle or driver, it doesn’t mean that coverage cannot be found elsewhere. Different insurance companies use various risk assessment methodologies, so while one insurer may decline coverage, another might be more than willing to provide it. In fact, there are numerous carriers with a wide appetite for insuring various types of cars, and some even specialize in covering exotic or high-end vehicles.

The insurance market is diverse, offering opportunities to find suitable coverage that aligns with the unique needs. Therefore, it’s essential to get multiple car insurance quotes to secure the best coverage available, even when you have no problem insuring your automobile or finding coverage. 

If you encounter difficulties in securing insurance coverage for your specific vehicle, consider seeking assistance from an independent agent. These agents represent multiple insurance companies and are better equipped to find a suitable policy that caters to your unique requirements.