When Can Insurance Coverage Be Denied?

Most states in the U.S. Require that car owners carry auto insurance with mandatory coverages and limits. These limits and coverages vary between states as do insurance premiums. While courts usually rule in favor of the insured person when an insurer denies coverage, there are instances when auto insurance coverage can be denied by an insurer. Here are some reasons why you should not lie when you go to get insurance quotes.

If the insured person lies on his application for insurance and the nature of the lie constitutes a material misrepresentation, the insurer has grounds to deny coverage. A material misrepresentation is usually information that was deliberately omitted by the applicant, such as a teenager driver in the household or an active lie, like a phony address which the insured uses to get lower premiums. To deny coverage, an insurer must prove that the nature of the lie was such that they would not have written the policy if they had known the truth. If they would have written the policy but charged a higher premium, they cannot deny coverage. They will cancel the policy and the insured will have to pay higher premiums after having a policy cancelled for cause.

Policies which are purchased to comply with state mandatory insurance requirements may have clauses which allow companies to deny coverage under certain conditions. The most common restriction is the excluded driver. If an auto owner excludes a driver on the policy to reduce his premiums, he agrees not to let that person drive the car. If the excluded driver is permitted to drive the car, coverage can be denied. If the driver knew where the keys were and took the car without permission, coverage can still be denied since letting the driver have access to the keys constitutes implied permission in most states.

Although unlike most states, Illinois statutes don’t require an insured to carry certain types of coverage, most of the grounds for denial of coverage are still applicable. Illinois car insurance policies written to satisfy mandatory insurance requirements, still have clauses which can allow insurers to deny coverage. The best way to save money on auto insurance is to get insurance quotes from several companies rather than lie on the application.

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