Auto Insurance - Bankruptcy Now Affecting Auto Insurance Premiums |
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Jay Leo
3 December 2009
Due to the current status of our economy, many individuals who would never have given a thought to the possibility of bankruptcy are now facing it.
It is not longer what happens due to you failing or just blowing money, this happens due to the costs of everything climbing.
There was an increase of 34% from October 2007 to October 2008 in the filings of bankruptcy in the United States per the New York Times. Families who were thought to be solid middle class are now filing Chapter 13 bankruptcy to make sure they don't lose their homes and other possessions due to the detrimental impact we have all faced. Individuals who want to protect the equity within their homes or vehicles with a loan, Chapter 13 is a viable option, but it will come at a price.
You will run the risk of auto insurance companies and other creditors not giving you as good of rates due to your filing of bankruptcy. Many individuals do not stop to think of the consequences a bankruptcy can have upon their automotive insurance rates.
In all actuality, your rates will most likely go up do this situation. It will greatly depend on what your credit score was prior to the bankruptcy. If you have a current auto insurance policy and make your payments on time, you may not see an increase in your premium at the time of the renewal. Many companies will check your credit history once a year.
This can cause you to pay more for your insurance if you would choose to change carriers or you do not make your payments on time with your current policy. Any form of bankruptcy will have a negative impact upon your credit score and will remain on your history for around 10 years.
Filing bankruptcy and then searching for a new automotive insurance company could be a financial mistake as many go by credit score alone and this would make your rates rise up a lot. They look at this as a type of assessment of risk you are to their company.
Not only the claim risk but the risk of you not paying your premiums on time and causing them to have to do more work on your policy. Some insurance companies could decline to give you an insurance policy with them at all.
This can happen for as long as the bankruptcy remains on your credit. Many individuals feel it is unfair for automotive insurance companies to go by credit history to provide a premium. The insurance companies have a standard way of doing business and that is looking at you driving history, credit history, and risk assessment; along with your vehicle details and your age.
A bankruptcy to an insurance company can be like a financial fender bender. Many insurance companies feel that if a person has had financial troubles in the past that they are sure to have them again and that increases the risk that they associate with you. You need to keep in mind that if you have your insurance premium taken directly from your bank account or charged to a credit card each month, you will have to let them know when you file bankruptcy so that they may change your way of payment.
If they put payment through and it is declined, you will most likely have your insurance canceled.