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Auto Insurance Application Denial

Auto insurance application denial is a painful experience for drivers. It is tough to deal with being turned down for car insurance no matter what reason the insurer gives for declining to take you on as a customer. This is not the end of the world, however. There are some things we can do as drivers when our applications are denied by auto insurance companies, and we do have some rights that help us better navigate our way through the insurance process. If you find yourself in this tough circumstance, learn about the options you have, the possible alternatives to car insurance, and the ways you can make the best of the situation.

Reasons for Insurance Application Denial

There are multiple reasons why auto insurance companies sometimes decline to offer coverage to applicants. Once in a while human error is to blame and a legitimate mistake was made, with the company accidentally denying the application when by all rights it should have been approved. This is not often the case, of course, but it is still something to keep in mind.

Most of the time there are specific reasons an insurance company will point to when auto owners inquire about their application denial. Underwriting for auto insurance policies is based on the evaluation of a number of different factors. Some of these factors include age, gender, driving history, credit history, geographic location, and even the type of car being insured. Drivers who are young, male drivers, motorists with a history of accidents, people with bad credit, and owners of high risk vehicles are all deemed risky to insure, and when their policies are underwritten they are more likely than most to be placed into the high risk category. But with enough of these factors put together they might be denied coverage altogether.

If Your Application is Denied

If your car insurance coverage application is denied by the car insurance provider, there are certain steps you ought to take to get to the bottom of things and to decide what to do next. First of all, it is responsible and wise to find out why the application was denied. At the very least, this can give a driver insight going forward looking for coverage elsewhere. To make this type of request, you must put it in writing and send it directly to the insurance provider. In most states, insurance companies have 30 days to respond to these requests according to state law.

In situations where the insurance company's response shows inaccuracies or incidents you were not aware of, the next step is to appeal. When this happens, motorists can contact the state DMV for motor vehicle reports. These reports will show any license suspensions, moving violations and other such incidents on your record. If the report comes back without the incidents in question from the insurance company's records, this document is something you can show to them as part of the appeals process.

CLUE Reports and Car Insurance

CLUE (Comprehensive Loss Underwriting Exchange) reports greatly contribute to the policy underwriting process, and can actually be part or all of the reasons for the denial of your insurance application. A CLUE report is a claims history that allows insurers to look at any claims you have made as a driver when they are underwriting your insurance policy. The report contains some basic but pertinent information including the driver's name, date of birth, auto insurance policy numbers, and claims information such as the date of claim, loss type, the amount of money paid out on the loss, and specifics on the automobiles covered by the loss.

If your insurer cites your CLUE report as the reason why you were denied coverage, you do have the right to take a look at it to make sure it does not contain any inaccurate information. If everything in the report is accurate, it is likely that you'll be relegated to looking around at other companies for insurance coverage. Often drivers in this situation need to focus on high risk providers to get into a policy and save the most money. Traditional insurers that focus on standard and preferred driver policies usually cannot be price competitive on high risk policies, if they carry them at all.

If even high risk providers balk at the prospect of insuring you, your state's high risk pool might be your only option for getting insured. These programs are administered by states and allow drivers coverage in cases where they are declined by several insurers. Companies are required to participate, so you are assured of at least getting a policy. If this is how things play out, focus on safe driving to improve your CLUE report over time and get back into a standard policy. Auto insurance application denial usually leads to high insurance premiums.


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