Car Insurance After Bankruptcy: What to Know
How does car insurance change when you file for bankruptcy? Let's explore the potential impacts.
How does bankruptcy affect car insurance rates?
Although bankruptcy is not a direct insurance rating factor, its impact on your credit score can lead to higher car insurance rates. A driver's credit score is a primary rating factor used by insurance companies to assign quotes. The lower your credit score, the more you will pay for car insurance. It is possible to find affordable car insurance after bankruptcy — even if it did a number on your credit. We'll dive into the details below.
What is the best cheap car insurance company after bankruptcy?
The only connection between bankruptcy and car insurance is through credit score. Since most companies use credit score as a rating factor, we've listed below the cheapest car insurance companies for drivers with "very poor" credit (300-579). See our methodology.
| Company | Avg. Annual Premium |
|---|---|
| Allstate | $3,434 |
| Farmers | $2,724 |
| GEICO | $2,174 |
| Nationwide | $1,984 |
| Progressive | $3,716 |
| State Farm | $4,126 |
| USAA | $2,393 |
Dynamic auto insurance data methodology
Methodology: The auto insurance rates displayed above and throughout this page are dynamic, meaning the data will refresh when the most recent information is made available. Rates are based on a sample driver profile — a 30-year-old single male driver with a Honda Accord and full coverage. This profile was adjusted based on common pricing factors used by major car insurance companies, like age, coverage level, driving record and others.
Nationwide is the cheapest car insurance company after bankruptcy. This doesn’t mean Nationwide will be the most affordable company for you, specifically. Car insurance pricing is driver-specific and changes based on your age, where you live, and the vehicle you drive. Use this data as a starting point in your search for car insurance after bankruptcy. Enter your ZIP code below to get personalized quotes.
Compare quotes from over 100 providers.
Why do bankruptcy and credit scores affect car insurance?
When pricing your policy, an insurer tries to predict how much risk you will present as a client. Indicators such as age, gender, location, vehicle, driving history, and credit score, go into your monthly premium. Like having a bad driving history, having a low credit score may lead to more expensive auto insurance rates. Learn more about what factors affect your rate.
To price policies, car insurance companies rely on studies showing that drivers with poor credit file more claims than do drivers with good credit. If you have poor credit — or have gone through recent bankruptcy proceedings — you're deemed riskier and more expensive to insure.
| Credit Tier | Avg. Annual Premium |
|---|---|
| Poor | $3,147 |
| Below Fair | $2,461 |
| Fair | $2,071 |
| Good | $1,760 |
| Excellent | $1,506 |
Please note: comparing car insurance quotes does not harm your credit score. Car insurance companies will make a soft inquiry into your credit history, rather than a hard inquiry — more commonly utilized during the mortgage-lending process — so your credit score should not take a hit.
Are there any car insurance companies that don't use credit score as a rating factor?
Because credit score is considered to be an accurate determinant of risk, all major car insurance companies use it as a rating factor. However, some states don't allow insurance companies to use credit scores as a pricing tool. California, Hawaii, and Massachusetts do not use credit scores as a rating factor. If you live in one of these states, your credit isn’t an insurance rating factor.
Outside of this, you can consider telematics-based companies and programs if your credit score is causing an expensive insurance premium. Telematics uses the way you drive to determine your premium. In theory, the safer of a driver you are, the cheaper your premium will be. There is only one purely telematics-based company — Root Car Insurance. Root specifically does not use drivers' credit scores to set rates. However, the company's policies are not available in every state. Most major insurance providers also offer similar programs, but credit score remains a rating factor.
Another company to consider is Metromile. Although Metromile is not telematics-only, the company uses a pay-as-you-go model. Traditional rating factors are still utilized in Metromile's pricing model but your mileage is much more significant. If you're a low mileage driver living in one of the states Metromile writes insurance policies, this might be the company for you.
Make an informed decision: compare insurance rates today.
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.