How Does Bankruptcy Affect Car Insurance?

How does car insurance change after you file for bankruptcy? Let's explore the impact.

Car insurance after bankruptcy


Although bankruptcy is not a direct insurance rating factor, its impact on your credit score can lead to higher car insurance rates. Credit score is a primary rating factor used by insurance companies to assign premiums. The lower your credit score, the more you will pay for car insurance. It is possible to find affordable car insurance after bankruptcy — we'll dive into the details below.


Bankruptcy and car insurance
  1. Why does bankruptcy affect car insurance?
  2. Are there insurance companies that don’t look at credit score?
  3. What are the cheapest car insurance companies after bankruptcy?
  4. Methodology and additional information



Why do bankruptcy and credit score 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. Much like a poor driving history, a bad credit profile will result in higher auto insurance rates.

Historical data show drivers with poor credit file more claims than do drivers with good credit. Moreover, these drivers' claims are more costly, on average. If you have poor credit — or have gone through recent bankruptcy proceedings — you're deemed riskier and more expensive to insure.


Credit Level Average Annual Premium
Very Poor (300-579) $2,687
Fair (580-669) $2,191
Good (670-739) $1,800
Very Good (740-799) $1,495
Exceptional (800-850) $1,257

The process of getting car insurance quotes won't 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 be safe.




Are there any car insurance companies that don't use credit score?


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 score as a pricing tool. California, Hawaii, and Massachusetts do not use credit score as a rating factor. If you live in one of these states, your credit isn’t an insurance rating factor.

Outside of that, you could find better luck by shopping among smaller local or regional insurance companies in your area.




What is the best car insurance after bankruptcy?


The only connection between bankruptcy and car insurance is through credit score. We've listed below the cheapest car insurance companies for drivers with "very poor" credit (300-579). See our methodology here.


Company Very Poor (300-579)
Farmers $2,044
Nationwide $2,411
Progressive $2,616
Geico $2,720
State Farm $2,907
Liberty Mutual $2,911
Allstate $2,913
Average $2,646

On average, 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 a personalized quote.


Find affordable car insurance today!


Additional resources and methodology


If you’re looking for more information on car insurance after bankruptcy, see our additional articles:


Metholodgy


Between September and December 2017, The Zebra conducted comprehensive auto insurance pricing analysis using its proprietary quote engine, comprising data from insurance rating platforms and public rate filings. The Zebra examined nearly 53 million rates to explore trends for specific auto insurance rating factors across all United States zip codes, averaged by state, including Washington, DC.

Analysis used a consistent base profile for the insured driver: a 30-year-old single male driving a 2013 Honda Accord EX with a good driving history and coverage limits of $50,000 bodily injury liability per person/$100,000 bodily injury liability per accident/$50,000 property damage liability per accident with a $500 deductible for comprehensive and collision. For coverage level data, optional coverage (that must be rejected in writing) is included where applicable, including uninsured motorist coverage and personal injury protection.

National property and casualty losses information is from the Insurance Information Institute and the NOAA National Centers for Environmental Information U.S. Billion-Dollar Weather and Climate Disasters report.

For vehicle data, analysis referenced the most popular vehicles in the U.S. by 2016 year-end sales, according to Goodcarbadcar.net.

Data may vary slightly throughout the report due to rounding.

Additional Resources:

How Does Bankruptcy Affect Car Insurance?

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