Understanding Insurance Issues

What Does It Mean To Be An Uninsurable Risk?

Getting denied auto insurance once is annoying. However, receiving multiple denials from a variety of companies often indicates you are uninsurable in some way. Here's what that means and what you can do to overcome this problem to get the coverage you need for your vehicles.

The Risk of Loss is Too High

As they are in the business of making money, insurance companies evaluate applicants based on how likely they are to file claims for accidents, property loss, and other issues. Being deemed uninsurable means there is something in your personal or financial life that makes the company feel there's an extremely high risk they will lose money on your account.

For instance, if you've been convicted of multiple DUIs, auto insurance providers will be reluctant to approve you for coverage because there's a high risk you'll get into an alcohol or drug-related accident that could force them to pay out hundreds of thousands of dollars in compensation to all those affected.

However, being labeled an uninsurable risk isn't always related to bad driving behavior. Owning a high-performance or extremely expensive vehicle can also get you placed in this category. In this case, the problem is the insurance provider would have to pay out an exorbitant amount if you got into an accident, something they want to avoid.

A car insurance agent can point out issues that may be getting in your way of obtaining coverage for your vehicle, so it's a good idea to contact an agent to discuss the matter.

Options for Getting Coverage

To legally drive, you must have auto insurance, so going without is not an option. One way you can get coverage is to ask providers about policies for high-risk candidates, such as an SR-22. These are non-standard policies written specifically for people who would not be covered under regular ones, such as those with extremely poor driving records or who live in high-crime neighborhoods.

Another option is to contact the state about joining a risk pool. Insurance providers who participate in these programs are required to accept people assigned to them by the state. There are usually minimum qualifications needed to enroll, so be sure to talk to a representative about your situation to see if you are eligible.

With either of the above options, be prepared to pay a higher premium than normal. The good news is, you may eventually qualify for better coverage at a lower price down the road if you invest time into fixing your uninsurable risks. Connect with a local auto insurance agent for more information and assistance with this issue.