Filing Bankruptcy Can Hurt Your Auto Insurance Premium
Posted in Auto Insurance
September 17th, 2009
There is no question that bankruptcy can hurt your credit score, which can in turn have a negative effect on your auto insurance. Thismeans that those affected by a 34-percent increasein filings of bankruptcy from October 2007 to October 2008, as reported in a recentstory from New YorkTimes,may have plenty to worry about.
Sadly, many of those bankruptcies simply could not have been avoided. A crippled economy, followed by the increase in job losses and foreclosures, resulted in many workers accumulating debt to stay afloat. In turn, many people looked to Chapter 13 bankruptcy filings to structure a way to pay off their debt. However, the problem is that bankruptcies will show up as a negative in credit reports and stays there for up to 10 years.
When looking for auto insurance, most companies will want to run some type of credit check. They want to gauge your financial history to determine what financial activities they might expect in the future. If you show a bankruptcy on your credit report, this looks to the insurance company like a financialfender bender. As a result,you could either be denied insurance, orget offered a much higher premium than expected.
The good news is that you don’thave to succumb to higher auto premiums if you have a bankruptcy on your report. There are auto insurance companies that will not run credit checks at all. And some that will even agree to offer reasonable premiums even if you have blemishes on your report. In addition, you can look for price breaks, such as good student or multiple premium discounts. But most importantly, you want to shop around. Don’t go with the first company that offers you a reasonable premium just because your credit isn’t great.
A bankruptcy on your credit report can definitely hurt your chances of acquiring a fair auto insurance premium. But it doesn’t halt your chances completely. So shop around for great rates. You might be surprised by what you find.