How Does a Recall Affect Car Insurance Rates?

Turns out, not much at all. Which is great news for you, good news for your car insurance company, and not-so-great news for the manufacturer.

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On any given day, there are a number of horrifying statistics being bandied about the collective internet newsroom like a really, uncomfortably hot potato. But we came across one earlier this week that was so shocking it actually didn’t seem like it scared people enough: So far, in 2014, 52 million cars and trucks have been recalled in this country. Let’s repeat that for a second: 52 million. That’s the equivalent of one out of every five cars on the road.

In 2014, 52 million cars were recalled.

It got us wondering: Why aren’t people more worried about recalls? And in the event of a recall, what exactly happens to your car insurance? Do your rates get wonky if you ignore a recall notice? As usual, we did the digging so you don’t have to. What we found:

Recalls 101

Just what is an auto recall and how do you deal with one? The folks at Esurance offer up a great definition:

An auto recall occurs when a manufacturer (or the NHTSA) determines that a car model (or several models) has a safety-related defect or does not comply with a federal safety standard. When this happens, the automaker will alert owners to the problem and usually offer a free repair. Keep in mind that a recall doesn’t mean that the entire vehicle will be replaced.

You’ll know if your car, or one of its parts, has been recalled because car companies are required to send letters to affected customers via mail—but that does mean you’ll have to watch your snail mail, not your email. I almost lost a recall notice last year because I just assumed it was my dealer asking me to extend my warrantee again. Want an e-friendly way to double-check? The National Highway Traffic Safety Administration keeps an updated list of recalls, and you can even subscribe via email for notification for your particular vehicle. Anxiety assuaged, no?

The recall letter should outline your next steps—generally speaking, you’ll have to make an appointment with your dealer to fix the problem.

Think of a recall as a manufacturer's giant rewind button.
Think of a recall as a manufacturer’s giant rewind button.

Recalled car? Your Insurance Should Be Fine

An auto recall is the responsibility of the manufacturer, not your insurer. Even if you get in a recall-related accident, your insurance company will likely make your manufacturer fork over the dough. However! If you put off getting the recall fixed and it has long-term safety impacts on your car, it could cause your rates to go up.

How that makes any sense: Where it gets tricky is in regards to safety. Car insurance rates are determined in part by the relative safety of a vehicle. If a recall has long-term affects on the safety of your car, your rates could therefore be negatively impacted. But this usually isn’t the case, so don’t worry unless your car has seen multiple recalls or needs other repairs due to the issue.

Farmer’s offers this helpful explanation of which factors affect your car insurance rates:

The kind of car you drive can impact your car insurance rate, especially if you have comprehensive and collision coverage. Rates are based on the type of vehicle loss history – how often it’s stolen, and how expensive it is to repair or replace after a theft or accident.

Additional factors that can contribute to your car insurance premium include engine size, body type, age, value, safety and security features, and crash-test ratings.

But Farmer’s also emphasizes that there are very few hard and fast rules for determining rates, which is why it’s always best to speak with a licensed insurance agent. As they explain, “Every car and driver is unique, and while certain standards can apply to Car insurance premiums – like cars with fewer safety features or car alarm systems typically costing more to insure — there are a variety of exceptions.”

Your Car’s Value Post-Recall

A bit more good news in the fine print: If the recall is big enough that it nabbed significant media attention, it might actually decrease the value of your car, which could theoretically make your car cheaper to insure. As explained in [this piece](if the replacement value of a vehicle decreases it would cost less for the insurance company to replace it, therefore the insurance rates would actually decrease), “If the replacement value of a vehicle decreases it would cost less for the insurance company to replace it, therefore the insurance rates would actually decrease.”

So rest assured: While dealing with a your car’s recall might be a hassle, chances are, it won’t have any affect on your car insurance rates.