Buying Auto Insurance after Bankruptcy

Auto insurance is a necessary expense that unfortunately many people are tempted to skip if they are struggling financially. Even if you have recently filed for bankruptcy, don't mistakenly believe that you will save money by not purchasing auto insurance coverage. In the end, not having auto insurance policy is a financial disaster waiting to happen.

Buying auto insurance after bankruptcy may prevent a few issues you may not have had to deal with before. If your state allows auto insurance companies to assess risk based on your credit score and you have a bankruptcy on your credit, this could present a problem. A bankruptcy significantly lowers your credit score which would make you look like a higher risk to the auto insurance company.

The Insurance Information Institute claims that using credit scores to predict risk is fairly accurate in predicting the likelihood of a person filing for a claim, but the use of credit scoring for insurance underwriting is still hotly debated and controversial.

If you have a low credit score from bankruptcy, and your state allows credit to be a factor for auto insurance providers in determining risks, the reality is you will likely have to pay a higher rate for auto insurance after bankruptcy. Thankfully, you can still keep your auto insurance rates as low as possible after bankruptcy by following the money saving tips on this website and comparing several auto insurance quotes with our free auto insurance quote finder, before you buy your car insurance policy.