Auto Insurance Options: What If I Can't Get Approved

October 15, 2013

Auto insurance options are available to drivers who don't qualify for standard policies. Learn about high risk insurers and other alternatives.

Be aware of all of your auto insurance options before settling on a policy. Car insurance options range from company to price to coverage type. Because there is a lot to choose from, it takes a little time to properly research car insurance offers.

Start with the Basics
You can get good coverage by starting with the minimum and building up from that. Most states mandate a minimum amount of coverage: property damage and personal liability, but don't stop there. It's wise to add to the basic coverage, say, increasing personal liability from $50,000 to $100,000. The same thing goes with property damage. Additionally, including collision and/or comprehensive coverage with a higher deductible will protect you and your car from other unforeseen events that otherwise would put a hole in your pocketbook.

Evaluate Your Driving Style
If you drive infrequently, or you only drive borrowed or rented cars, consider alternative insurance plans. Basic coverage usually works for safe drivers who rarely drive or own old, damaged cars, and non-owner insurance is a good plan for drivers who rent or borrow.

Insurance for Leased Cars

Leasing requires you to purchase a higher amount of insurance for the simple reason that the car is still owned by a lease company. In the event that you get in an accident and injure someone, the lease company could be held liable. In order to avoid that scenario, the company stipulates that you hold a certain level of protection that is quite a bit higher than the state minimums.

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In general, lease companies require that you purchase a minimum amount of insurance, defined by the numbers 100/300/50. This is a shorthand notation meaning dollar amounts in the thousands. For the average lease, you must hold $100,000 per person bodily injury coverage, $300,000 total personal bodily injury and $50,000 for property damage. All of these numbers are to insure you from financial harm in case you are to blame in an accident. In addition, you have to hold physical damage insurance to pay for the leased vehicle itself. This comes with a deductible--the amount up to which you have to pay before the insurance takes over. These, keep in mind, are the minimums most companies require.

Higher Coverage
It is advisable to extend your coverage limits up from the required minimums to best protect you and your finances in case of an accident. A lease company requires you to keep insurance that is adequate to protect themselves and their asset from liability. Although this shields your personal finances to an extent, it is not intended for your person and/or possessions. Protect yourself with a more comprehensive policy, in case the worst happens.

Gap Insurance
If your leased car is totaled, destroyed by a natural disaster or stolen, the insurance company will only pay out as much as the car is worth. That amount might be--and often is--less than you still owe on the car. In that situation, you would be stuck with making up the difference to the lease company. That could be in the thousands of dollars. Gap insurance protects you in that scenario. It pays out the difference between what the car is worth and what you still owe. Many lease companies require it, others do not. Even if it's not required, it is a sensible choice.

Company Cars
Leasing cars for a business, like personal leases, requires that the business buy car insurance. It is well worth it for a business to purchase the most comprehensive insurance available, to protect their employees and to shield the company from any and all liability in case of a work-related accident.

What If I Can't Get Approved for Auto Insurance?

You may have auto insurance options if you can't get approval for standard coverage from a car insurance company.

There are a number of reasons you may be denied coverage from a particular company, but there is always at least one option open to you. Some of these options are expensive, so you should find out what the cost of insuring a car will be before you purchase a car in the first place.

Reasons You May Be Turned Down

  • One common reason is that you have a poor driving record. If you have a high number of points on your record, either for accidents or tickets, it will be difficult for you to find car insurance from any company.
  • A unique, high performance car is likely to be difficult to insure. The risks of theft, expensive damage, and an accident due to reckless driving are all higher with these vehicles.
  • You may be turned down if you are a new driver and are applying for insurance on your own. No matter what the age, new drivers tend to have more accidents.
  • Another possible reason has nothing to do with you, but merely where you live. If vandalism and theft is common in your area, you may not be able to get standard insurance.

Here are some options if these circumstances apply to you.

Shop Around
Don't stop with a denial from one company. What one insurer considers risky may not be a concern for another company. Give several different companies a chance to consider your situation. You may be surprised that you are able to find one without too much trouble.

Look for "High Risk" Insurers
If you are truly unable to get coverage from a standard insurance company, search among the insurance companies who specialize in high-risk clients. Some of these are independent companies, while others are affiliated with larger insurance companies, but are a separate entity specifically designed for taking the high risk business of the company. You should expect to pay higher premiums from these companies and have terms that are less favorable than those found on standard insurance policies.

State Assigned Risk Pools
If you have been turned down by at least 3 insurance companies, you can apply to be included in your state's assigned risk pool. As your avenue of last resort, insurance companies are required to take a certain number of the drivers in the pool. The companies can charge high premiums, however, and they generally do.

Auto Insurance Options for Recouping Expenses after an Accident

There are several different auto insurance options for being reimbursed for expenses after an accident occurs.

If Your Car Is Totaled
Over 30 states require that expenses like sales tax, registration and title fees be reimbursed if it is necessary to replace a car. If you are in this situation, one of the first questions to ask your agent is whether or not these expenses will be covered, and if you need to fill out any paperwork to request reimbursement. In some cases, policy providers automatically calculate these expenses. In other situations, you need to request reimbursement within 30 days of the accident or purchase of a new car, and complete some form of documentation.

If another driver is at fault for the accident, their insurance should be responsible for paying replacement expenses. Again, this should be one of your first questions when dealing with the insurance company. If you are working through an attorney, they should be able to answer any questions regarding reimbursement of replacement expenses by the other party's insurance carrier.

Medical Expenses
If you have medical coverage as part of your insurance policy, you may be able to seek reimbursement for medical expenses that result from an accident. Depending on the terms of the policy, medical expenses can also be those incurred by a passenger, pedestrians or another driver.

Car Rental Expenses
Another add-on option for auto insurance is car rental coverage. If you need to rent a car because your car has been in an accident and is being repaired, car rental coverage will cover the related expenses. Very often, there are limitations on daily reimbursement rates for this type of coverage.

Repair Expenses
Collision and comprehensive auto insurance coverage provides reimbursement for damage to your car. Collision will cover repairs to your car up to the fair market value of your car, regardless of who is at fault for the accident. Comprehensive coverage reimburses for damage to your car that is the result of other events that are not related to a vehicle accident, like fire, vandalism or flooding.

Liability Coverage
Liability auto insurance coverage is required by most states. If you are at fault in an accident, this covers damages and bodily injury to the other parties involved that is the result of the accident. Bodily injury not only covers medical expenses, but also any lost wages that result from the accident. Damages include the other car involved, plus any other property that may need to be repaired as a result of the accident (buildings, fences, etc). Legal expenses incurred may also be covered by liability insurance.

Getting auto insurance is easy. Getting the right type for the right price can be challenging. There are many different types of insurance to match the many different types of drivers. You should closely evaluate all of your options before deciding on the plan that works best for you. Being well informed can only help you in the long run and will enable you to save money.