What are my rights when I am refused car insurance coverage?

When you are denied car insurance from any insurers on the market, your rights include documentation, filing a complaint and knowing the reason you were denied. Car insurance is required by law in almost every state, so not having car insurance is very problematic.

Depending on the reasons cited by the insurance company, you have several options to pursue in order to get car insurance coverage. Read on to learn what your options are and then be sure to take the time to compare quotes in case you are in need of proper coverage.

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Table of Contents

Reasons for Car Insurance Application Denial

There are several reasons why your car insurance application can be denied. Sometimes it is a simple human error that accidentally denies your application instead of approving it. With so many drivers interested in becoming customers of even a single auto insurance company, it can become

More often than not, however, there are very specific reasons cited by the insurance company for which you can get turned down for coverage.

Car insurance approval is based on a variety of factors:

• Age
• Driving record (if there is one)
• Your credit score
• If you are young and/or inexperienced as a driver, you won’t have a driving record and your car insurance will most likely be higher in premiums

If you have a poor credit score, or you’re a high-risk driver, you may not necessarily be denied coverage, but you might end up with a higher rate. The reason for this is because anyone without a credit history or a driving record hasn’t been on the road long enough to have much experience. Most insurers will look at this as a high-risk endeavor.This is why rates for drivers who have been on the road for years are generally lower than auto insurance rates for a new driver.However, that’s not to say that someone with excellent credit or a pristine driving record will be immediately accepted. There are other factors that a company will view as well.

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Your Rights if You are Refused Car Insurance Coverage

If you are refused car insurance coverage, then the first thing to do is to ask the insurance company why your application was denied.

In order to do this correctly, you must put your request in writing and submit it to the insurance company directly.

By law, in the majority of the states, the insurance company is to notify you within 30 days of the request.

Incorrect Information

In the case where your motor vehicle report shows incidents that you did not know about or are not liable for the occurrence, then you need to appeal. If this is the reason cited you should be able to contact the DMV (Department of Motor Vehicles) and get a copy of your motor vehicle report.

If your motor vehicle report shows incidents that you did not know about or are not liable for the occurrence, then you need to appeal. If this is the reason cited you should be able to contact the DMV (Department of Motor Vehicles) and get a copy of your motor vehicle report.

Although most states charge a nominal fee for this service, you may be able to obtain a copy for free due to the fact that it was used to deny your insurance application.

This report will show any moving violation citations as well as any suspensions you may have if any.

If this report is clean then you need to take it back to your insurance agent and request a review of your original insurance application.

Bad Credit

Another reason you can be denied car insurance coverage is if you have bad credit.

Most often a low credit score results in a high insurance premium. However, if you are denied insurance because of your credit report, you should be able to request your credit report for free.

You can also get a free credit report once every year or purchase it from all three credit reporting bureaus for approximately $20.

If your credit report has erroneous information that is causing your score to be misrepresented, you need to have it corrected right away. If that is the case, then you should be able to re-apply for your insurance and get approved with no problem.

If you are refused car insurance coverage based on your CLUE report, then your only course of action may be to apply with a few different insurance providers.

High Risk

If you are considered to be a high-risk driver then you may need high-risk insurance. Most states have an Assigned Risk Pool, where drivers can apply for an insurance program through the state.

The insurance program is privately run through a standard insurance carrier, but the state requires many insurance companies to participate and offer high-risk insurance to at least a set number of people.

The price of the insurance is the same as for all high-risk drivers; it is a much more expensive premium but at least you have legal car insurance so you can drive your car.

Read More: Compare Guaranteed Approval Car Insurance: Rates, Discounts, & Requirements

Filing a Complaint

In any situation, if your car insurance application is denied and you believe it should have been approved, you always have the option of filing a complaint with your state insurance commissioner. The state’s insurance department will review all complaints and follow up with the insurance company on your behalf.

If it is determined that you were wrongly denied, the insurance company will be required to approve your application.

Understanding the Impact of CLUE on your Car Insurance Coverage

CLUE is an important part of your insurance history similar to the importance of a credit report. CLUE stands for Comprehensive Loss Underwriting Exchange and is basically a recorded trail of all of your insurance claims.

This report includes your auto insurance claims and homeowners insurance claims. In addition to your personal information, such as name, address, and date of birth, the report will list:

• All of your policy numbers
• All of the information related to every claim including the date of the loss, what kind of a loss it was, and how much of the claim was paid directly whether to the insured or to a third party

Car insurance companies will use your CLUE report to determine your risk factor. If it shows a substantial amount of losses and claims, your insurance rate could be higher than that of an average or low-risk applicant.

It could also be a reason to deny your car insurance application altogether. The fewer claims you have, the better your CLUE report will be and the better rates you will get.

Read More: Can’t get insurance on a car, what do I do?

Case Studies: Rights and Remedies for Denied Car Insurance Coverage

Case Study 1: Incorrect Information on Motor Vehicle Report

John applied for car insurance but was denied coverage due to incidents listed on his motor vehicle report that he was not aware of and not liable for.

He appealed the decision by obtaining a copy of his motor vehicle report from the Department of Motor Vehicles (DMV) and found it to be clean. John then approached his insurance agent with the report to request a review of his original application.

Case Study 2: Denial Based on Bad Credit

Samantha had her car insurance application denied due to her bad credit. She obtained a free copy of her credit report to check for any erroneous information that might have affected her credit score.

Samantha discovered inaccuracies and immediately took steps to correct them. With the corrected credit report, she reapplied for insurance coverage and was approved without any issues.

Case Study 3: Considered a High-Risk Driver

Mike was considered a high-risk driver, leading to multiple rejections for car insurance coverage. He researched the Assigned Risk Pool available in his state, which allowed high-risk drivers to apply for insurance through a program overseen by the state.

Mike enrolled in the high-risk insurance program and obtained legal car insurance coverage, although at a higher premium.

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The Bottom Line

You have several rights when you are refused car insurance coverage, including the right to know why you were refused and to obtain copies of the documents that were used to make the assessment.

You can seek help from the state insurance department and you can also apply with different insurance companies to either find one who will approve you or to just shop around for a better rate.

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