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.
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.
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.
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.
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.
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.
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.