Rejection protection: How to get auto insurance after getting snubbed

Amy Higgins

Driving without auto insurance can be scary. In most states, it’s illegal.

So, what would you do if you were involved in an accident without insurance coverage? Would you have the money to pay for damages or injuries you cause? Would you be cited by a police officer if you were stopped for a traffic violation and couldn’t produce proof of insurance?

Auto insurance could be the key to your financial well-being in these scenarios. But what if you’re unable to obtain coverage because insurers keep turning down your application? The Insurance Information Institute cites several reasons you might be rejected by an auto insurance company:

• You have a poor driving record.
• You own a special, high-performance car.
• You have not driven long enough to establish a driving record.
• You have no insurance record.
• You live in an area with high theft and vandalism losses.

No driver left behind

You may not be able to acquire coverage in the regular market where auto insurers have the freedom to pick their policyholders, but you should be able to get a high-risk insurance plan through what’s called the “residual market.” According to the Insurance Information Institute, all states and the District of Columbia use special systems to make sure auto insurance is available to high-risk drivers.

The Massachusetts Automobile Insurance Plan, for example, assigns resident drivers who cannot obtain insurance in the regular market to insurers. According to the Massachusetts Office of Consumer Affairs and Business Regulation, insurance companies that are licensed to sell auto insurance in the Bay State must participate in this plan. Most of these insurance providers are the same ones that sell auto insurance in the regular market, but they also must insure drivers assigned to them through the state plan. Because the state is spreading the high-risk drivers around, so to speak, no single auto insurance company will be overloaded with risk.

To get high-risk car insurance, you must follow your state’s guidelines to qualify. In Massachusetts, for example, you first must try to obtain coverage through the regular market. If you’re continually rejected, ask any insurance agent to submit an application to the Massachusetts Automobile Insurance Plan. The state plan will then assign you to a company where you can obtain auto insurance coverage.

Get back on track

In 2008, nearly 1.8 million private passenger cars were insured in the residual market in the United States, according to the Insurance Information Institute. So if you’re having trouble finding auto insurance in the regular market, it’s obvious you’re not alone. If you’re forced to acquire insurance through the residual market, you’ll probably pay a higher premium, but you eventually should be able to get an insurance plan in the regular market if you work on the things you can improve.

A major factor that determines your auto insurance premium is your driving record, so drive more responsibly if you have a lot of points on your license. If you’re in California, points and accidents will stay on your record for 36 months, according to the California Department of Motor Vehicles. But in California, more serious offenses like hit-and-runs or DUIs will stay on your record for 10 years.

Also pay attention to your credit score, because insurance providers use that information to assign you an insurance score, which, in turn, may help determine your rate. According to the Insurance Information Institute, studies have shown that people who manage their money responsibly tend to drive responsibly — and insurance companies use that to their advantage.