Haris Ashley
If you're struggling to find auto insurance, there are several reasons why this might be the case. You could have a poor driving record, be a new driver, have no insurance record or a bad insurance record, have a bad credit rating, live in an area with high theft and vandalism, or own a high-performance car. If you're denied coverage, you should get quotes from other companies or get an agent to find a company that will cover you. If you're denied coverage by multiple insurers, you may need to join a state-assigned risk pool or get a policy from a private insurance company that specializes in high-risk drivers.
| Characteristics | Values |
|---|---|
| If you have a poor driving record | Join a state-assigned risk pool |
| Get a policy from a private insurance company that specializes in "high-risk" drivers | |
| Take steps to become a lower risk for insurers | |
| If you have not driven long enough | Take a defensive driving course |
| If you have no insurance record or a bad insurance record | Drive safely and diligently obey traffic laws |
| Repair your credit | |
| If you have a bad credit rating | Repair your credit |
| If you live in an area with high rates of theft and vandalism | Take precautions against theft and carjacking |
| If you own a special or high-performance car | Get a policy from a private insurance company that specializes in "high-risk" drivers |
| If you are denied coverage for an unlawful reason | File a complaint with your state's insurance commissioner |
| If you are a teen driver | Join someone else's insurance policy |
What You'll Learn
Join a state-assigned risk pool
If you can't find auto insurance in the "voluntary market", you might need to join a state-assigned risk pool. This is a last-resort option to ensure drivers can buy the state's minimum insurance requirements when other insurers turn them down.
State-assigned risk pools are typically more expensive than traditional insurance. The exact price will depend on your state, but expect to pay significantly higher premiums than you would in the voluntary market. For example, in New York's assigned risk plan, you're limited to $250,000 in liability coverage for bodily injury to one person in a car accident. If you have significant assets, such as a house and savings, your insurance won't be enough to cover what you could lose in a lawsuit.
Additionally, your coverage options may be limited. For instance, some state pools don't allow you to purchase collision and comprehensive insurance.
To join a state-assigned risk pool, you may need to apply to several car insurance companies and be denied coverage by each one. Then, contact your state's Department of Insurance or an auto insurance agent in your state to apply for the state's car insurance plan.
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Get a policy from a private insurance company that specialises in high-risk drivers
If you're a high-risk driver, you may be denied a policy by traditional private insurance companies. This could be due to a poor driving record, a history of insurance violations, or a lack of insurance history. If you're unable to get a policy from a traditional insurer, you can consider getting a policy from a private insurance company that specialises in high-risk drivers.
These companies provide "non-standard" policies for people with bad driving records, high-performance cars, or who live in high-risk neighbourhoods. Examples of such companies include The General and Dairyland. These companies may be able to offer you more comprehensive coverage than is available through state-assigned risk pools.
To find these insurers, you can contact your insurance professional, your state insurance department, or a company like Roughnotes that serves the independent insurance agent market and can refer you to the appropriate brokers.
While high-risk auto insurance policies are typically more expensive, you can work towards improving your record and removing your high-risk designation over time. This can be done by taking steps such as taking a defensive driving course, driving safely and diligently obeying traffic laws, avoiding drinking and driving, and repairing your credit score.
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Improve your driving record
If you have a poor driving record, it can be difficult to get car insurance. A history of collisions, traffic violations, or DUI/DWI convictions can make it challenging and expensive to get insured. However, there are steps you can take to improve your driving record and increase your chances of obtaining auto insurance. Here are some instructive and focused tips:
- Enroll in a defensive driving course: Taking a defensive driving course can help you improve your driving skills and reduce your insurance rates. Many states, like California, offer the option to take a state-approved defensive driving course to clear points from your driving record. These courses can provide valuable safe driving tips and lower your insurance premiums.
- Drive safely and obey traffic laws: Make a conscious effort to drive safely and diligently follow traffic rules. Avoid accidents and tickets by driving cautiously and obeying speed limits. Take extra precautions to prevent road rage incidents and deer-car collisions.
- Never drink and drive: Drinking and driving is not only dangerous but can also result in serious legal consequences. Always designate a sober driver when you go out, or use alternative transportation options if you plan on consuming alcohol.
- Maintain your vehicle: Ensure that all mechanical parts of your car are in proper working condition. Address any issues, such as broken taillights or faulty child safety equipment, to avoid violations and ensure your vehicle is safe on the road.
- Avoid reckless driving: Reckless driving behaviours, such as using a handheld device while driving, failing to stop at a stop sign, or driving the wrong way, can result in serious consequences. Stay focused and obey all traffic laws to avoid reckless driving citations.
By following these steps and maintaining a clean driving record, you can improve your chances of obtaining auto insurance and becoming a lower-risk driver in the eyes of insurers. Remember that improving your driving record takes time and commitment to safe driving practices.
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Improve your credit score
Improving your credit score is a surefire way to make yourself more appealing to auto insurance companies. Here are some ways to do that:
Make On-Time Payments
Your debt payment history accounts for 35% of your FICO® Score and is the most important credit score factor. Payment history includes on-time, late, and missed payments, all of which are reported to one or more of the national consumer credit bureaus (Experian, TransUnion, and Equifax). Always making payments on time can go the furthest to helping you improve your credit.
Pay Down Revolving Account Balances
How much you owe accounts for 30% of your FICO® Score, and your credit utilization rate—the percentage of available credit you're using on revolving credit accounts such as credit cards—is a major element. While some experts recommend keeping your utilization rate below 30%, there's no hard-and-fast rule. Aim to keep it as low as possible.
Don't Close Your Oldest Account
Length of credit history makes up 15% of your FICO® Score and is heavily influenced by the age of your oldest account and the average age of all of your accounts. While loan accounts are typically closed once you pay off the debt, you can keep credit card accounts open indefinitely. Closing a credit card can hurt your credit score, especially if it's one of your oldest.
Diversify the Types of Credit You Have
Credit mix accounts for 10% of your FICO® Score and involves managing different types of credit. For example, someone with two credit cards, an auto loan, and a mortgage loan will have a stronger credit mix than someone with just one credit card.
Limit New Credit Applications
Each time you apply for credit, the lender will run a hard inquiry on one or more of your credit reports, which can knock fewer than five points off your credit score. Multiple inquiries in a short period, especially when applying for credit cards, could have a compounding negative effect.
Become an Authorized User
If you're new to credit or rebuilding your credit score, having a loved one add you as an authorized user on their credit card can have an immediate positive impact on your credit score.
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Contact your state's insurance department
If you are unable to find auto insurance, it is recommended that you contact your state's insurance department. Each state in the US has an insurance department that can provide assistance and information on auto insurance options. They can provide valuable insights into the specific regulations, requirements, and alternatives available within your state.
By reaching out to your state's insurance department, you can gain a better understanding of your rights and options as a driver. They can guide you through the process of obtaining auto insurance, especially if you are facing challenges due to your driving record, vehicle type, or other factors. The department can inform you about state-specific programs, such as risk pools or assigned risk plans, which are designed to help high-risk drivers obtain the necessary coverage.
For instance, in Washington state, the Department of Licensing (DOL) requires drivers to maintain valid auto liability insurance and may ask for proof through an SR 22 form. On the other hand, New York State has the New York Automobile Insurance Plan (NYAIP), commonly known as the Auto Plan or Assigned Risk Plan, which is a special insurance facility established to ensure that all drivers can obtain the required coverages. This plan is a last resort for those who cannot find coverage in the voluntary market.
State insurance departments are knowledgeable about the insurance landscape within their respective states and can provide you with a list of companies that cater to high-risk drivers or non-standard policies. They can also inform you about any state-specific regulations regarding insurance coverage, such as minimum liability requirements or mandatory rental car coverage.
Therefore, if you are struggling to find auto insurance, contacting your state's insurance department is a crucial step to gaining access to the information and resources you need to obtain the required coverage. They serve as a valuable resource for drivers facing challenges in obtaining auto insurance and can help you navigate the complex world of auto insurance with greater ease.
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Frequently asked questions
If you're denied auto insurance by one or two companies, it doesn't mean that all insurers will refuse to cover you. Each insurance company considers factors like your driving history, age, credit score, and location differently. So, if one company has denied you coverage, apply for quotes from several other insurers. If multiple companies deny you a policy, you can consider the following options:
- Sign up for your state's risk pool. Many insurance companies participate in state risk pools, and each insurer must accept the motorists assigned to it by the state.
- Purchase a policy from a company specializing in high-risk drivers. Some insurance companies provide "non-standard" policies for drivers with poor driving records, high-performance car owners, or those who live in high-risk neighbourhoods.
- Improve your driving record by taking a defensive driving course, driving safely, and never drinking and driving.
- Repair your credit score by paying your bills on time, disputing errors, and reducing your credit utilization ratio by paying off debt.
Insurance companies frequently deny coverage if the applicant has a recent history of accidents, a series of minor traffic tickets, or a serious infraction such as a DUI. Other reasons for denial include:
- No driving experience, which is common for teen drivers.
- No insurance history, which means providers consider you an unknown risk.
- Bad credit rating, as insurance companies use credit reports to determine risk.
- Location, as living in an area with high rates of auto theft and vandalism may lead to denial.
- Vehicle type, as classic cars, custom cars, and high-performance vehicles require special insurance that some traditional insurers don't offer.
Auto insurers participate on a voluntary basis in state-assigned risk pools. Each insurer must accept the motorists assigned to it by the state. While risk pool premiums are substantially higher than traditional insurance, they do provide auto coverage regardless of the driver's history.
Some insurance companies provide "non-standard" policies for people with bad accident records, high-performance cars, or those who live in high-risk neighbourhoods. These policies are often more comprehensive than those available through assigned risk pools.
