What If I'm Rejected for Car Insurance?
Being rejected for car insurance doesn't mean you can't get the coverage you need to legally drive. Don't panic if your application was denied. Virtually anyone with a valid driver's license can get auto insurance if they know what they need and where to look.
Understanding Insurance Rejection
If you've been rejected for car insurance, you're probably labeled a "high-risk" driver.
From an insurance company's perspective, a high-risk driver has a higher than average possibility of filing a claim—and costing the company money—compared to other drivers.
You can even experience auto insurance rejection if you have existing coverage. Companies can decide to cancel or not to renew your policy if circumstances arise that negatively affect your risk level. If your policy has been canceled, you're likely to be categorized as high-risk when applying for coverage with a different company.
Common Reasons for Being Rejected for Car Insurance
While no standard exists for defining high-risk drivers, you're more likely to be rejected for one of the following reasons:
If you have an existing insurance policy, your company might decide not to renew your coverage when the term ends. In many cases, nonrenewal occurs due to changes in your driving history or other characteristics that increase your risk, though sometimes this is related to a change in the company's practices.
What's more, if your insurance policy is in effect for less than 60 days, your insurer can cancel your coverage for any reason. However, if your policy is more than 60 days old, your insurance can only be canceled before it expires if one of the following reasons:
- You don't pay the premium despite reasonable attempts to contact you regarding missed deadlines.
- You committed fraud on an insurance claim or lied on your application for coverage.
- Your driver's license is revoked or suspended for any reason.
- You're diagnosed with a medical condition that makes you unable to drive safely.
Reasons You Can't Be Rejected
If you've been rejected for auto insurance, you're entitled to find out why you're not eligible for coverage. Laws vary by state, but most don't allow companies to deny car insurance to licensed drivers for any of the following reasons:
- Marital status
- Sexual orientation
- Mental or physical disability
In addition, some states don't permit insurance companies to use your driving history or credit score to determine your coverage.
If you think you might have been rejected for coverage illegally, it's important to contact your state insurance commissioner to clarify your state's laws and report a possible violation.
How to Find Car Insurance After Being Rejected
If you've been rejected for car insurance, your first step is to request another quote from a different company. In fact, it's a good idea to solicit several quotes since every insurance company assess risk differently. Try a mix of larger and smaller companies to exhaust all of your options and get several different points of view.
While the process of looking for insurance can be frustrating, don't give up even if you get multiple rejections. If you're caught driving without insurance, you could be subject to fines, license suspension, impoundment, and possibly even jail time. This also can complicate your chances of getting traditional coverage at reasonable rates in the future.
You can expedite the process of finding coverage after being denied by exploring a few different options.
Look for high-risk policies
Many insurance companies specialize in providing "high-risk" or "non-standard" policies. This type of coverage is intended for drivers who've been denied traditional insurance for legal reasons such as bad driving histories and poor credit.
Qualifying for high-risk insurance means you might have limited options since it's not available from every insurer. You can expect to pay higher than average for high-risk insurance, though comparing quotes can help you find the best rate.
Get insurance through your state assigned risk pool
The state assigned risk pool is a last resort for the most difficult-to-insure drivers. To qualify for your state assigned risk pool, you typically have to prove that you've been rejected a set number of times, depending on your state's laws. Most policies offered through state assigned risk pools provide the minimum coverage required to legally drive in that state.
In practice, most states don't offer insurance directly to drivers in the risk pool. Instead, most use a system in which insurance companies pool together to share the risk of insuring otherwise uninsurable drivers. The state assigns a specific number of drivers to each company, based on the amount of business the company conducts in the state. The companies are then obligated to accept these drivers, along with the risk that comes with providing them coverage.
You can find out more information about your state assigned risk pool by contacting your insurance commissioner.
Ask a family member to add you to their policy
You may be able to avoid the state assigned risk pool by sharing an insurance policy with your parents or another family member in your household. It especially helps if they have a clean driving record. While your higher risk will still be reflected in their policy pricing, it likely won't be as expensive as the one you'd purchase alone.
Improving Your Eligibility for Car Insurance
After you settle on a policy that allows you to drive legally in your state, you still have more work ahead. If you're purchasing coverage from a state assigned risk pool or a high-risk insurer, you're likely paying higher than average rates for minimal coverage.
It's important to work to reduce your risk so you can qualify for extensive coverage and competitive rates in the future.
Qualifying for traditional coverage can help you save money on premiums and get you the type of policy that protects your assets and provides financial security. Here are some strategies for improving your eligibility for traditional auto insurance: