Once you get car insurance, you may assume that you will never be involved in a car crash. You probably never even anticipate being in an incident where your auto insurance can drop you or where you are denied coverage altogether.
Unfortunately, insurance companies may occasionally refuse to cover a potential policyholder, generally for good reasons. You need to understand the reasons you may be denied insurance coverage and what you can do if it happens to you.
Why is auto insurance coverage denied?
People who are more likely to submit a claim, like those with a history of reckless driving, have a greater chance of being denied coverage by car insurance providers. If you have a recent history of accidents, a series of minor traffic citations or a significant offense such as a DUI, insurance companies usually refuse coverage.
These are all signs of a dangerous driver who may cause an accident and file a claim. While these are common reasons for coverage denial, they are not the only cause. Below are five reasons why an insurance provider will deny you coverage.
#1 – Your Commute Location and Distance
Insurance providers may be wary of drivers who have a daily commute or routinely travel vast distances. People who spend a lot of time traveling and commuting are more likely to be involved in an accident than someone who works from home or lives near their job.
#2 – Your Driving Record
One of the essential elements in determining whether a company will give you car insurance is your driving record. If you’ve been driving for 10 years and haven’t received a single parking citation, you’re more likely to get lower insurance rates and are less likely to be denied coverage.
Having a history of driving offenses or car crashes might lead to your application being denied, especially if you were at fault in the accidents. Years spent behind the wheel can also affect your premiums. The more driving experience you have, the more reliable you are to insurance companies.
#3 – Your Credit and Financial History
Your credit score impacts whether you are eligible for vehicle insurance and how much you will pay in premiums.
Insurers look at your credit for various reasons, one of which is that they feel there is a connection between having good credit and being responsible.
In the opinion of insurers, responsible drivers observe the rules of the road, and they pay their insurance payments promptly.
While a poor credit score does not always imply irresponsibility, it can lead to denial of coverage or higher rates. Even if you aren’t turned down for coverage due to poor credit, you may end up paying more for vehicle insurance than people with better credit.
This is why it’s critical to maintain an average credit score and get estimates from several different companies.
Car insurance providers may also look at your credit record to see your work history, how you’ve paid your bills, and what your credit utilization percentage is. Your credit utilization percentage is the amount you owe compared to the amount of credit you have available.
Insurers may be wary of you if you’ve had multiple recent hard inquiries on your credit. Suppose you’ve applied for numerous new loans or credit cards. That might mean you’re having financial difficulties, which could suggest a lack of accountability and a lack of finances to pay your premiums.
#4 – The Type of Car You Drive
Depending on the vehicle you drive, you may be eligible for insurance coverage. Someone who drives a plain sedan poses a far lesser risk to an insurance company than someone who drives a brand new sports vehicle.
One thing to keep in mind is whether your preferred automobile model is regularly stolen. Insurance firms have the option of refusing to cover automobiles that are known to be stolen or charging high fees for policies taken out with those vehicles.
Companies may also consider safety ratings, so pay attention to the most recent rankings while you’re looking for a car.
#5 – Your Age and Where You Live
Similar to how your home’s value can be determined by where you live, your insurance premium is defined that way too. When making coverage selections, insurance companies consider characteristics such as your age and where you reside.
If there has been a recent increase in automobile break-ins near you, you should anticipate your insurance options to be affected.
Furthermore, a teen driver will almost certainly pay more than a middle-aged driver, and someone who lives at a very hazardous junction will almost certainly pay more than someone who lives in a quieter area.
What should I do if your insurance coverage is denied?
After getting turned down for vehicle insurance, the first thing you should do is shop for coverage and apply with several companies. If you’re unsure about your best alternatives, go to an insurance broker or call a few different insurance providers personally.
While many companies offer online estimates, if you have a poor credit rating or payment history, explaining the reasons to an agent can help your case.
Instead of looking for other insurance, try to improve your credit and driving practices. For example, if you frequently receive speeding fines or other driving offenses, make it a point to observe all local traffic regulations.
You can also consider attending traffic school to get some of those points removed from your record so you can get approved for coverage faster.
When you have a poor credit score, focus on paying off debts and making on-time payments. Even though these adjustments can take time, they will improve your chances of acceptance in the future.
Even when you know your credit and driving history is subpar, it’s still a good idea to get estimates from a few different insurance providers. That will make sure that you’re getting the best auto insurance coverage at the best possible price. It can also be a tactic to determine what type of work you need to do to get better rates.
Imani Francies writes and researches for the auto insurance comparison site, AutoInsurance.org. She enjoys helping people navigate denials and find the best coverage for their driving needs.
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