Can car insurance companies deny coverage?
Car insurance companies can deny coverage for several reasons, but you still have options if you are turned down for a policy. Whatever the reason for the denial, you are likely to find coverage with another company or may be able to rectify why you were denied in the first place. Bankrate created this guide to help you understand why insurance companies may refuse to insure you and what you can do about it.
Can car insurance companies deny coverage?
The short answer is yes; insurance companies can refuse to insure you. Insurers are in the business of risk, and they are likely to turn down drivers whom they consider too risky, which can happen for several reasons. State insurance laws and regulations may impact who and when carriers can issue a denial of service, and these laws may vary from state to state. For example, some states prohibit insurance companies from turning down a driver because of their age or credit rating. But remember that the best insurance companies are looking for reasons to approve your policy, so with a little effort, you may find solid coverage at an affordable rate.
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Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Reasons you may be denied car insurance
You may have your insurance application denied for a variety of reasons, many of which are tied to personal factors:
- You have several moving violations and a less-than-perfect driving record
- Your license has been suspended or revoked
- You drive a fast, high-performance vehicle
- You are too young to buy your own insurance policy
- You live in an area with a high number of vandalism incidents and car thefts
- You have a lapse in coverage
- You lack a previous insurance record
We recently found a thread on Reddit where a user was complaining about losing coverage:
“So back in January my car got totaled (not at fault), and I ended up cancelling my policy with Liberty Mutual, since I didn’t have a car. Obviously now I know that that was a horrible decision to make. I still don’t have a car yet, but I’ve been trying to get a new non-owners (or whatever they are called) policy, but every place I try to get quotes from denies me, even Liberty Mutual even though I’ve had them before. What are my options right now to get insurance? I know I’m more than likely going to have to pay a big premium, but I’m close to being able to get another car again so I need it asap. I’m in Pennsylvania if that helps.”
Other users seemed to have similar experiences, with one suggesting calling an independent broker who can help shop for companies. Another user had a good experience using Carvana’s car insurance.
What do I do if I am denied coverage?
Almost every state requires drivers to carry a minimum amount of insurance to drive legally. Even if you are denied coverage through traditional insurance options, you are still expected to find and purchase at least minimum coverage through a provider, such as a high-risk insurer. If you are involved in an accident or caught driving without insurance, there may be serious financial and legal consequences for not having coverage.
If you find your car insurance coverage denied by a standard carrier, you might want to contact high-risk insurance companies. High-risk insurance companies have different underwriting guidelines, and while they may not be the cheapest option, you might be more likely to get approved for coverage.
You could also consider asking a family member to add you as a driver to their policy, but this may only be an option if you live with them. However, depending on your relationship, you might not be able to add your vehicle to their policy (especially if you’re the sole owner). There’s also no guarantee that you will meet your family member’s carrier’s underwriting guidelines. If you don’t, it may also deny you coverage.
Carriers that may extend coverage to high-risk drivers
If you’ve been denied coverage from several carriers, you may need to seek other options. Fortunately, several national carriers may be more willing to extend coverage to high-risk drivers.
Progressive
Progressive Insurance was presented with the 2024 Bankrate Award as Best Auto Insurance Company for High-Risk Drivers, so it’s safe to assume that it benefits drivers who fit into this category. The company offers SR-22 certificates when needed and offers a broad array of discounts to help you keep premium costs in check. It also offers robust coverage options that range from rideshare coverage to loan/lease payoff insurance. If you prefer to do your insurance business online, it has good digital functionality through the website and highly rated apps for Android and Apple products.
Allstate
If you’re looking for incentives to improve your driving record, Allstate may be another good option. The carrier’s Safe Driving Bonus may reward you with a check or credit to your insurance policy for every six months without an accident. The carrier also offers a robust telematics program, Drivewise, that may lower your rate for passing safe driving challenges. Unlike some other high-risk auto insurance companies, Allstate offers a fairly comprehensive list of endorsements that may appeal to drivers looking to customize their coverage.
The General
The General is a national insurance provider specializing in high-risk drivers’ coverage. It also offers quotes and possible coverage for drivers who need SR-22 filing. As a high-risk insurance company, The General’s average rates may be high for drivers with multiple incidents on their driving record or other high-risk rating factors. However, you may be able to lower your rate with potential discounts for taking a defensive driving course, being a good student, owning a home and more.
How to avoid being denied car insurance coverage
If you’re concerned about the potential for being denied in the future, or if you’ve got a past denial and want to be sure it doesn’t happen again, there are several strategies you can adopt to help make you more desirable as a potential policyholder to carriers. Consider the following:
Drive safely
Although insurers consider multiple factors when determining whether to insure you, perhaps no factor is more important when determining your premium than your driving record. A clean record will likely earn you a favorable rate that may be below average in your region. If you are making an effort to drive carefully and safely, you may even want to consider enrolling in your insurer’s telematics program, which could reward you with significant discounts for avoiding hard stops, speeding and other risky behavior.
Consider a defensive driving course
Got some marks on your license, but you’re ready to turn over a new leaf behind the wheel? Many insurers offer a discount to drivers who participate in a state-mandated defensive driving course. In some cases, these courses are even available online so that you can take them from the comfort of your home. Generally, there is a small charge for the course, but they are usually inexpensive, and you’ll more than make up the difference when you factor in your anticipated discount.
Work on your credit score
In most states (California, Hawaii, Massachusetts and Michigan are the exceptions), insurers can consider your insurance credit score when determining rates. Insurance companies often give preferential rates to those with high scores since they are statistically less likely to file claims, making them more low-risk to insure. Is your credit score on the low side? It doesn’t happen overnight, but you can improve your score over time by paying bills on time and keeping your credit utilization ratio low.
Think carefully before buying a car
If you were denied coverage because your car is considered too high-risk, you might want to consider a different vehicle. By choosing wisely, you may find a car that is likely to be very insurable at a relatively low cost.
Frequently asked questions
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Based on data sourced from Quadrant Information Services, the average cost of car insurance in the U.S. is $2,329 for full coverage, which includes optional collision and comprehensive coverage, and $633 for state-mandated minimum coverage. Your own rate will likely differ from these averages since it is unique to you and your circumstances. Insurers access multiple factors to determine your rate, including your driving history, ZIP code and, in many states, credit history, as well as your car’s age, make and model.
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Some states require drivers to carry an SR-22 — sometimes known as SR-22 insurance, certificate of financial responsibility or CFR — after an insurance lapse, license suspension or other high-risk driving behavior, like a DUI. An SR-22 certifies that you carry the minimum car insurance coverage required to drive legally in your state. You will receive a letter from your state’s DMV, BMV, Secretary of State or other applicable agency if you are required to carry an SR-22. Insurance companies that offer SR-22 insurance will file an SR-22 on your behalf, usually for a small fee and often electronically. For more information, you may want to contact your insurance agent.
Learn more: SR-22 insurance
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Sometimes, but it depends on the circumstances. Drivers under the age of 18 are typically required to be listed on a family member’s policy as they are too young to purchase their own policy. You may be able to stay on the policy once you reach the age of 18 if you still live with your family. To be listed as a driver on a family member’s policy, you will likely need to operate their vehicle regularly. However, if you don’t meet your family member’s insurance company’s guidelines, it too can decline to cover you.
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