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What You Put On Your Auto Insurance Policy Application Can Affect Your Coverage

Telling the truth in your car insurance application

The most common inquiry I receive goes something like this, "I paid all my premiums and I had 'full coverage' and now my insurance company won’t cover my crash, what can I do?"

As I will discuss below, sometimes the insurance company is denying coverage for a good reason; something that you can actually prevent from happening in the first place.

Common Denials of Coverage

  • Use of vehicle for commercial purposes.
    This may apply if you are using a “personal” vehicle for work-related functions or, most often, if you are using it for commercial gain, such as driving for Uber or Lyft in your spare time.
  • Driver is “not on the policy.”
    While most reputable insurance policies provide for coverage for any “permitted driver,” such as a family member, spouse, child, or similar, many lower end carriers (we call them substandard carriers in the legal business) have “owner/driver only” policies. These often will only cover the sole person on the policy, rather than other permitted drivers. Be careful to actually read your policy to ensure it does not contain such an exclusion!
  • “Place of Garaging” is inconsistent with registration.
    Sometimes insurance agents advise clients to list a location where the vehicle is housed that is in a cheaper to insure neighborhood than where the owner/driver actually lives. This was a nice finesse around higher premiums until the insurer found out a claim was made and did some detective work and denied the claim. This is a great way to screw up coverage; pay the higher amount rather than playing games and be left holding the bag.
  • You have made a “material misrepresentation” on your application, such as failing to list a crash or claim, lying about your address, or having a revoked or suspended license.
  • You or the person driving does not have a valid license.

You Should Be Concerned If:

  • You have a substandard insurance carrier, such as Safeway, Safe Auto, Allied American, Unique, or Direct, to name the worst offenders.
  • You are a member of a minority group (especially Black, living in a Black zip code, Hispanic, or you have a noticeable “ethnic” name.). Another way to have a heavy accent. This is likely illegal on many levels, but insurance companies commonly prey upon those who are least likely to have means to hire a lawyer or fight back. Note: if you are denied coverage and you fit one of these categories, you should contact a lawyer who handles insurance coverage immediately. You may also wish to contact a civil rights lawyer.
  • You are required to have state minimal coverage under SR-22, due to a driver’s license suspension or similar offense.
  • You have bad credit and chose a carrier that would extend you credit.
  • There are multiple drivers on your policy, especially if they live in different places.
  • You lied on the application.
  • A combination of any or all of the above.

What Should You Do?

Purchase your insurance from a broker; not online. An insurance broker deals with multiple brands and will get you the best coverage for the best price. He or she has skin in the game because your satisfaction is the primary way he or she garners new business and keeps his insurers happy too.

Brokers are not necessarily going to provide you with the cheapest coverage, but, when you factor in exclusions, the denials and game playing you get with the substandards, it won’t cost you much more, if at all.

If you do get in the situation where your carrier is slow to pay, you can use your broker to put pressure on the carrier to force the issue. They usually resolve things in your favor so the broker and the client is kept happy.

Do not buy from places that promise to “insure you on the spot.”

Do not buy the state minimum coverage.

Never lie on your application for insurance.

Never purchase insurance from substandard insurance carriers!

But I Read The Entire Insurance Code And I Don’t See Where This is Required…

Let’s be honest; no way you read the entire Illinois Insurance Code. No one would unless they had the choice of watching Cheaters on permanent rerun loop or reading the entire Insurance Code!

But the Code does not always say everything; in many cases insurance policies control the terms of the agreement for insurance. Many low end carriers claim over and over again in court that the lack of a driver’s license invalidates coverage. This is a question the courts have repeatedly answered to the contrary, but the substandards continue to revisit this issue. Similar nonsense denials occur with drivers who are allegedly illegally in the United States. They do this because they can, not because it’s fair or right!

Takeaways

  • Common Reasons Why Insurance Coverage Is Denied.
  • Hot Button Reasons You Might Be At Risk.
  • What You Can Do To Ensure Your Insurance Will Cover You.
  • Other Common Factors To Be On The Alert For.

Contact Chicago Personal Injury Lawyer Stephen Hoffman

As in all cases involving injury and potential liability, immediately get medical treatment, report the crash to police and your own insurance company, and contact a personal injury lawyer.

If you've been in an accident and have questions, contact Chicago personal injury attorney Stephen L. Hoffman for a free consultation at (773) 944-9737. Stephen has nearly 30 years of legal experience and has collected millions of dollars for his clients. He has been named a SuperLawyer, has a 10.0 rating on Avvo, and is BBB A+ accredited.

Stephen handles personal injury and workers' compensation claims on a contingency fee basis, which means you don’t pay anything upfront and he only gets paid if you do. Don’t wait another day, contact Stephen now.

Categories: General

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