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Can you be denied full coverage?


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Question: My mom bought a 1996 vehicle that’s worth $3,800. She wants to put full coverage on it, but her insurance broker said her insurer won’t allow it because of some scratches and dents on the car. I never had this problem with my insurance company, and I’ve fully insured older vehicles.  What should she do? 

Answer: If your mother wants collision and comprehensive coverage (often referred as full coverage) on her vehicle and her current car insurance company refuses her request, she should comparison shop and purchase her auto insurance policy elsewhere.

Coverage offerings and rates vary greatly from one insurance company to the next, and this allows for motorists to find an affordable auto insurance policy that includes coverages they want.  Underwriting rules and guidelines also differ insurer to insurer.

For instance, some car insurance companies limit how old a vehicle they will cover with comprehensive and collision.  If your vehicle is beyond their limit, such as 20 years, you will be offered only liability coverages.  (See “Insure your car from showroom to junkyard”)

Some auto insurance providers will offer car owners full coverage if their vehicle has dents and scratches or other minor damage, as long as it is documented and the policyholder understands he or she cannot claim for this pre-existing damage. 

Other car insurance carriers will at first refuse your request for comprehensive and collision coverage if your vehicle has existing damage, but will allow you to add full coverage once documentation and an inspection show that necessary repairs were made. 

And still other auto insurance companies won’t offer you full coverage period if a vehicle has existing coverage, or existing damage that is over a certain monetary amount, such as $500.

When an insurance company won’t insure a vehicle due to damage, it’s not trying to criticize a person’s choice in an older car that shows its age. It’s a business decision.  If the car were in an accident it would be difficult to discern old damage from new, thus causing issues with claims.

There is also the issue of insurance fraud.  Dishonest individuals sometimes buy a beat-up older vehicle for a song and then put comprehensive and collision on it and later try to make a claim for pre-existing damage.  Fraud like this can end up costing honest auto insurance policyholders, like you and your mother, more in premiums.

By comparison shopping for a full coverage policy with multiple auto insurance companies at once, like CarInsurance.com offers here, your mother  should easily be able to find a provider that is pricing competitively for her particular set of rating factors, including her older vehicle. 

I'd advise your mother to also review “Is it time to drop comp and collision” to help her decide just how long she needs full coverage on her older vehicle.

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