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Bad Credit Auto Insurance

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Many people don’t know that the contents of their credit report can affect their insurance premiums. Agencies use the number of timely and missed payments, to come up with what’s known as an insurance score. This, in turn, factors into your premium amount, with lower scores meaning a higher rate and vice versa. There are things that people can do to increase their insurance score and avoid having to seek out auto insurance for bad credit.

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Car insurance policies for drivers with bad credit

It’s not impossible to get car insurance with bad credit. Drivers who have a low credit score will likely have to pay higher rates , unless they drop the level of coverage to the bare minimum that’s required in their state. If you have bad credit, research the best way to get the most out of your auto insurance without sacrificing coverage and affordability.

Why do credit scores affect insurance coverage and rates?

Credit scores are typically used to ascertain your chances of defaulting on a loan, but insurance companies also use them to judge the level of financial responsibility a person has. For example, instead of evaluating the risk of poor fiscal choices, they use the information on your credit report to determine your potential risk of filing a claim . The higher the risk, the higher the monthly premium on a car insurance policy for those with bad credit.

Bad credit auto insurance providers

While some insurance companies provide car insurance for people with bad credit, there are many others that will not take on the risk. The only way to find out if a certain provider covers drivers with bad credit is to shop around for a quote. If you have trouble finding one who will underwrite a policy, look for smaller insurers or specifically for bad credit car insurance companies. These agencies tend to specialize in higher risk policies and can offer the coverage you need.

Factors to consider when choosing a provider

  • Coverage – One of the most important factors to consider when choosing car insurance for people with bad credit is the coverage. Make sure you have enough to cover yourself in the event of an accident.
  • Customer service and care – when choosing an insurance company, make sure you find one that is known for its customer service. In times of crisis, you want to make sure that you have an agent who is there to help when you need it.
  • Budget – Since car insurance for those with bad credit can cost several thousand dollars more per year than a standard policy, make sure you can afford the monthly premium. In some cases, you can lower the monthly premium by increasing your deductible.

How bad credit drivers can save money on auto insurance

While premiums are higher for people with poor credit, that doesn’t mean there aren’t ways to save money on these car insurance policies. There are several discounts available even for those who need auto insurance and have bad credit.

Car insurance discounts for drivers with bad credit

  • Insurance bundles – Bundling insurance is one of the most effective ways to drive down the premium costs. Whether you own or rent a home, consider bundling your homeowner’s or renter’s insurance with your automotive policy for a percentage savings.
  • Good driver discounts – all insurance companies reward their drivers for practicing good driving habits. Follow the speed limit, avoid accidents and other moving violations and you’ll gradually see your auto insurance for bad credit premium decrease.
  • Going paperless – Going paperless can help save you a few dollars each month on your monthly payment. Opt to have your bills emailed to you instead of having a paper one mailed each month.
  • Loyalty discounts – Loyalty discounts are available for policyholders who continue to remain with the same company year in and year out.
Woman frustrated after seeing bad credit score online

Choose the right coverage

No matter what type of insurance you have, whether it’s a standard or non-standard policy, it can be tricky trying to figure out what type of coverage to get . With an auto insurance policy for bad credit, some insurance companies may require that you increase your coverage limits for them to underwrite the policy.

When you have bad credit, it may be tempting to lower the amount of coverage on your policy to save on your premium. However, most insurance companies will advise against this. Should you ever get in an accident and need to file a claim, it’s important that you have enough coverage to avoid having out-of-pocket expenses that you can’t afford to cover.

File claims wisely to avoid increasing premiums

One surefire way to increase your car insurance for bad credit premium is to file multiple claims. Each time you file a claim, you raise the risk level, so only do it when you absolutely need to. For example, if you’re in a fender bender with another vehicle, always file a claim, even if you’re not at fault. This protects you in the event that the other party attempts to file a suit.

However, if you’re in a fender bender with one of your own vehicles, or you damage your own property — such as knocking over a mailbox — it might be worth it to just pay the costs out of pocket. Avoid filing the claim against your auto insurance policy and instead pay for your own repairs; it’ll help keep your premium down.