If you're denied car insurance, which is a requirement in most states, you can shop around and apply for quotes from other insurance companies. In this article, we'll go over the following:
- Reasons you can't get car insurance
- If you have car insurance coverage and it gets canceled or nonrenewed
- Tips on how to find car insurance if you're denied coverage
What are the reasons why you can't get car insurance?
You can be denied car insurance if insurers believe you're a high-risk driver. Reasons like getting into multiple accidents, receiving speeding tickets or having a DUI can lead to getting denied car insurance. However, a person's driving record isn't always to blame.
You might also get denied car insurance if:
- You haven't driven in years or don't have an insurance record. If you don't buy another policy right away, you'll have a lapse in coverage and an insurer may deny you coverage in the future.
- You're a new driver. It may be hard to find auto insurance if you're a teenager and don't have much driving experience.
- You live in a high-crime area where theft and vandalism occur often.
- You have a high-performance car that runs a higher risk of being stolen.
- You have a poor credit score.
While laws vary by state, in general, you can't be denied coverage for the following reasons:
- Marital status
- Gender
- Sexual orientation
Some states also prohibit car insurance companies from denying coverage based on credit score. If you're unsure you've been denied coverage for an unlawful reason, you can contact your state insurance commissioner's office.
Car insurance cancellation vs. nonrenewal
It's possible that you already have car insurance and you lose it. This can happen in one of two ways. Your policy could be canceled or your insurer could decide not to renew your coverage. Insurance companies can cancel your coverage at any time, while you or your insurance companies can decide not to renew the policy once it expires.
Car insurance cancellation
Your insurance company has up to 60 days to cancel your policy for any reason. After that, they're bound to their agreement with you, minus the following exceptions:
- Fraud. If you lie to your insurer when getting a policy, they may cancel your coverage.
- Not paying on time, or at all.
- License suspension.
If your car insurance is canceled, it might make finding a new insurance policy difficult depending on the reason why it was canceled. Consider getting high-risk auto insurance, which may cost you up to five times more than a standard policy, if you can't find an insurance company willing to offer a standard policy. When you're applying for auto insurance, you have to be honest about your driving record and the number of drivers in your household.
Car insurance nonrenewal
A car insurance company can choose not to renew your policy after your term ends. The reasons your insurer might not renew are similar to cancellation. Other reasons include:
- Filing multiple claims.
- Your company is discontinuing your policy and not renewing due to business reasons.
- You moved to another state.
If your car insurance isn't renewed, it will be easier for you to find new coverage compared to it being canceled.
Your insurer should also give you notice before issuing a nonrenewal. States vary on their guidelines. In New York, for example, auto insurers must give at least 45 to 60 days' notice prior to the expiration date. In Oregon, insurers must give you at least 30 days' notice.
Remember, insurers aren't the only ones who can choose to not renew. You're able to drop your coverage at any time, for any reason.
What happens if you cannot get auto insurance?
If you're denied car insurance, there are a few steps you can take to make sure you have coverage.
Shop around
Shop around and compare auto insurance quotes to find the lowest rates, no matter your driving history. Why? Insurers vary in how they determine someone's premium. Just because one insurance company penalizes you harshly for a speeding ticket doesn't mean every insurer will. You should also check back after a few months to see if the insurer changed their requirements, or if you improved your driving record.
Denied car insurance? Shop around to find coverage from a different company.
Look for an insurance company specializing in high-risk drivers
Tried a number of companies and still can't find insurance? Seek out insurers who specialize in covering high-risk drivers. For example, Bristol West offers car insurance for drivers with no prior insurance, traffic violations or a DUI on their driving record. State Farm also provides coverage for drivers with a DUI on their record through their high risk auto insurance.
If a company doesn't sell this type of coverage, they often have a subsidiary that does. For example, Bristol West, which is a subsidiary of Farmers Insurance, offers coverage to high-risk drivers. Since high-risk car insurance is offered to drivers with a poor driving record, it is typically more expensive than a standard policy.
Check for state assistance
If you can't get coverage in the private market, you may still be able to get insurance through the state. This coverage comes through a state-assigned risk pool. To apply, you usually have to have been denied coverage a minimum number of times.
Each company must take on the high-risk applicants given to them by the state and accept the profit or loss that the customer brings. By going this route, you'll likely have to pay much higher rates, but you will have insurance, allowing you to drive legally. This should be a last resort, as even getting high-risk coverage from a private insurer generally offers more comprehensive policies.
Work on reducing your high-risk status
Of course, you don't want to stay classified as a high-risk driver forever. To reduce your high-risk status, you can improve your driving abilities and avoid getting into any other accidents or traffic violations.
You might consider going to a safe driving school to learn better driving behaviors. And, of course, keep practical advice in mind: don't drink and drive, avoid texting and driving, and watch the speed limit.
Even if you practice safer driving behaviors and sign up for a defensive driving course, don't expect to get lower rates immediately. Rather, it can take years to see your premiums go down. But don't let that put you off. Your patience will be rewarded.
Get added to someone else's insurance policy
If you're a new driver and live with your parents or another family member, you can get added to your family member's policy. You can also be added to your roommate's insurance since you share the same address.
Improve your credit score
If you were denied coverage due to credit, you may want to start improving your credit. Here are some tips to improve your credit score:
- Make payments on time for any debt you have, such as loans and credit cards.
- Try to use less than 30% of your total credit limit. For instance, if you have a $3,000 credit limit, try to put less than $900 on your credit cards in total.
- Don't open too many new credit card accounts in a short period of time.
- Check your credit report periodically to make sure it is correct.
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