Denied Auto Insurance: What You Need To Know

Car insurance companies can deny you coverage for a variety of reasons, including your driving record, credit score, age, location, and vehicle type. If you are deemed a high-risk driver due to multiple traffic violations, accidents, or a poor credit score, you may be denied coverage or face higher insurance premiums. Additionally, insurance companies may refuse to insure you if you live in a high-crime area or own a high-performance car. In most states, car insurance is a requirement, so being denied coverage can be problematic. However, you have several options to pursue coverage, including shopping around for quotes from different insurers, considering high-risk insurance, or seeking state assistance.

High-risk drivers

There are several factors that can contribute to a driver being considered high-risk. These include:

• Age: Teenagers and young adults are generally considered high-risk due to their lack of driving experience.
• Traffic violations: Multiple speeding tickets or other traffic violations can indicate a higher risk of future accidents.
• At-fault accidents: Causing an accident can be a red flag for insurance companies, suggesting unsafe driving practices.
• DUI/DWI convictions: Driving under the influence is a serious offence and often results in a driver being classified as high-risk.
• Reckless driving: Behaviours such as running red lights or weaving through traffic can indicate a higher risk of accidents.
• Poor credit: In most states, a low credit score can impact insurance rates as it is statistically linked to a higher likelihood of filing claims.
• Lapses in coverage: Allowing your insurance coverage to lapse can result in being classified as high-risk when purchasing a new policy.

It's important to note that not all insurance companies use the same criteria to determine high-risk drivers, and the impact of these factors can vary. For example, a single DUI conviction is likely to result in a high-risk classification, while a minor at-fault accident may not be enough to qualify as high-risk.

If you are a high-risk driver, you may find it more difficult to obtain affordable insurance coverage. Some insurance companies may not be willing to insure high-risk drivers, even at higher premium rates. However, there are still options available. You can try shopping around for quotes from different insurance providers, as some companies specialise in high-risk drivers and may be able to offer you coverage. You can also look into state-assigned risk pools or non-standard policies, although these options tend to be more expensive.

To improve your chances of obtaining affordable insurance and reduce your high-risk status, you can work on improving your driving record by avoiding accidents and violations, taking a defensive driving course, and improving your credit score.

DUI/DWI convictions

A DUI/DWI conviction can have a significant impact on your ability to obtain auto insurance. Driving under the influence (DUI) or driving while intoxicated (DWI) are serious offences that can result in a denial of coverage by insurance companies. Here's what you need to know about the effects of a DUI/DWI conviction on your auto insurance:

Denial of Coverage and High-Risk Status

Insurance companies have the right to deny coverage to individuals they consider high-risk drivers, and a DUI/DWI conviction is often a major factor in this assessment. With a DUI/DWI on your record, standard insurance providers may refuse to offer you a policy, deeming you too risky to insure. This can make finding affordable auto insurance challenging.

Increased Premiums and Rates

If you are able to obtain auto insurance after a DUI/DWI conviction, you can expect a significant increase in your insurance premiums. Insurance companies view drivers with a DUI/DWI as riskier to insure, and this is reflected in higher rates. The exact increase will depend on various factors, including your age, driving history, and the laws of your state. On average, you can expect your rates to increase by up to 74%, or even more in some cases.

SR-22 or FR-44 Requirements

Following a DUI/DWI conviction, your state may require you to obtain an SR-22 or FR-44 certificate. This certification verifies that you have the minimum required auto insurance coverage for your state. While the certificate itself may not directly impact your premium, there is typically a fee associated with obtaining it, ranging from $25 to $50. Additionally, some states mandate higher liability limits when you have an SR-22 or FR-44, further increasing your insurance costs.

Duration of Impact

The impact of a DUI/DWI conviction on your auto insurance can be long-lasting. In most states, a DUI/DWI will remain on your driving record for three to five years. However, in states like California, it can stay on your record for up to 10 years or even permanently. During this time, you may continue to face challenges in obtaining affordable insurance and maintaining lower rates.

Alternative Options

If you are denied coverage by standard insurance companies due to your DUI/DWI conviction, you may need to explore alternative options:

• High-Risk Insurance Companies: There are insurance providers that specialize in offering coverage to high-risk drivers, including those with DUI/DWI convictions. These policies tend to be more expensive than standard insurance but can provide the necessary coverage.
• State-Assigned Risk Pools: Many states have programs, such as state-assigned risk pools or assigned-risk plans, to assist high-risk drivers in obtaining the required auto insurance. These programs typically require you to have been denied coverage by a certain number of private insurance companies first.

In conclusion, a DUI/DWI conviction can have serious and long-lasting consequences on your auto insurance. It is important to understand the potential impact on your coverage, premiums, and ability to obtain insurance. Exploring alternative options and working to improve your driving record over time can help mitigate the challenges posed by a DUI/DWI conviction.

Poor credit score

A poor credit score can be a reason for car insurance companies to deny you coverage. While laws vary by state, in general, you can't be denied coverage based on your credit score in California, Hawaii, Massachusetts, and Michigan. In Maryland, auto insurance companies are prohibited from using credit history to determine whether they'll insure you, cancel your policy, renew your policy, or increase your premium once a policy is in effect.

Insurance companies cite various studies that find drivers with bad credit are more likely to file claims, which means these drivers pose a higher risk and are potentially more expensive to insure. The more risk and cost you pose, the higher your car insurance rates. Forbes Advisor's analysis of car insurance rates in the 46 states that allow credit as a pricing factor reveals an average rate increase of 76% for those with poor credit. That translates into a hike of nearly $1,180 annually on average.

In addition, a poor credit score can continually impact your car insurance rates. As long as you have poor credit, your car insurance rates can be affected.

If you have a poor credit score, you may be considered a high-risk driver by insurance companies. In this case, you may need to turn to a high-risk or non-standard car insurance provider. High-risk car insurance will probably be more expensive than an auto insurance policy with a standard insurance company.

To improve your credit score, you can:

• 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.
• Don't open too many new credit card accounts in a short period.
• Check your credit report periodically to ensure it is correct.
• Keep hard credit inquiries to a minimum.
• Monitor your score regularly.
• Maintain old lines of credit.
• Be aware of your credit utilization ratio.

Lapses in coverage

Lapses in auto insurance coverage can occur for a number of reasons, and it's important to address them as soon as possible as they can have serious consequences. An insurance lapse means that there is no liability insurance coverage for a registered vehicle for a period of time. This can happen between the date your insurance is cancelled and a new insurance policy begins, or between the date you register your vehicle and the date your new insurance coverage begins.

If you have a lapse in insurance coverage, the Department of Motor Vehicles (DMV) can suspend your registration and driver's license. You could also be arrested or ticketed, and your vehicle can be impounded. If you are involved in a traffic accident while uninsured, your license and registration will be suspended, and you will need to pay fines and penalties. The traffic court fine could be as high as $1,500 for driving without insurance, and you will need to pay a civil penalty to restore your driver's license.

Short lapses in auto insurance coverage are somewhat common, and reinstating your policy or purchasing a new one can be quick and easy. However, it's important to get insured again as soon as possible, as not having insurance coverage can be extremely costly if you are in an accident. If you cause an accident and injure someone or damage their car, you will have to pay out of pocket. Additionally, even one day without coverage can result in a higher car insurance rate, and starting a new policy is usually more expensive than staying continuously insured.

To avoid a lapse in insurance coverage, keep the address for your vehicle registration and driver's license current with the DMV, and have liability coverage from a company licensed by the relevant authority in your state. Keep insurance coverage on your vehicle for as long as it is registered, and respond to DMV insurance letters and orders immediately. If you no longer need car insurance, for example, if you are travelling or not driving for another reason, keep in mind that insurance companies may consider you a riskier driver if you let your policy lapse.

High-performance cars

Owning a high-performance car can make it difficult to obtain auto insurance. These vehicles are often deemed high-risk due to their increased speed and power, leading to higher insurance premiums. The challenge of obtaining insurance for high-performance cars stems from various factors.

Firstly, high-performance cars are typically placed in higher insurance groups because of their larger engines, making them more powerful and faster than average vehicles. This increased power and speed elevate the risk of accidents and insurance claims. As a result, insurance companies charge higher premiums to compensate for the heightened risk.

Secondly, high-performance cars are more likely to be targeted by thieves. The allure of a high-performance vehicle makes it an attractive target for theft, vandalism, or carjacking. This heightened risk of theft further contributes to the higher insurance premiums associated with these vehicles.

Additionally, the replacement parts for high-performance cars tend to be more expensive and difficult to obtain. In the event of an accident or mechanical issue, the cost of repairing or replacing these specialised parts can be significantly higher than those of standard vehicles. This drives up the overall insurance costs for high-performance car owners.

Moreover, insurance companies may also consider the driver's experience with high-performance vehicles when determining insurance eligibility and rates. Insurers may require drivers to have a certain level of experience or expertise in handling such cars to mitigate the risk of accidents. Lack of sufficient experience with high-performance cars could result in higher insurance premiums or even denial of coverage.

Lastly, the age of the driver can also impact the insurability of high-performance cars. Younger or less experienced drivers may face higher insurance rates or difficulties in obtaining coverage for these vehicles due to their perceived riskiness.

To overcome these challenges, owners of high-performance cars can explore specialist insurance brokers who understand the unique needs of performance car enthusiasts. These brokers can offer tailored policies with optional extras, such as agreed-value policies and coverage for imports, left-hand drives, and modified vehicles. Additionally, joining an owners' club or forum can help reduce insurance costs, as it demonstrates a passion for cars and responsible ownership.

Frequently asked questions