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.
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
bad credit car insurance companies. These agencies
tend to specialize in higher risk policies and can offer the coverage
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
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
make sure you can afford the monthly premium. In
some cases, you can lower the monthly premium by increasing your
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
Loyalty discounts - Loyalty discounts are available
for policyholders who continue to remain with the same company year
in and year out.
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.