Repossession Effect on Your Auto Insurance Rates

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Most of us look at each of our bills as separate entities. The electric bill has nothing to do with the car insurance bill and the payments we make on our credit cards have nothing to do with either. Sadly, the changes in the way auto insurance carriers now determine premiums means that every single thing you do to your credit score will have an impact on what you end up paying.

This understanding may leave you wondering – will a repossession effect auto insurance rates? The answer is yes but before we explain let’s take a look at exactly how your credit score impacts your insurance premium.

The Insurance Company Philosophy

Insurance companies are now, more than ever before, using the credit scores of their insurance applicants to determine both eligibility and rates. What does this mean to you? It means that if you’re constantly late on your payments and have a low score the insurance company is going to automatically assume you’re irresponsible with money.

What does money have to do with driving? Why will a repossession effect auto insurance rates? Insurance companies are relying on studies that have been conducted regarding the relationship people have with money. They’ve found, thus far, that individuals who treat their personal finances in a responsible manner tend to treat other aspects of their life with care as well. These include the decisions they make regarding the care of their home, the care of their automobile, and the way they act while actually driving. In short, they believe that those who are financially responsible are less likely to go out and cause an accident.

How a Repossession Will Effect Auto Insurance Rates

So here’s the kicker. If you’re the victim of a repossession you must be having some sort of financial difficulty. Maybe you made some irresponsible decisions but what if you’re merely a victim of the recession and are now either unemployed or underemployed? Regardless, that repossession will show up on your credit report, negatively impacting your overall credit history.

Your auto insurance underwriter will see your credit report and assume that you’ve consciously made a string of bad decisions. If your credit score is very low they may refuse to offer you a quote at all. If they do give you a quote, it will likely be higher than a person with your same situation but with a better credit score.

So, will a repossession effect auto insurance rates? Absolutely, but don’t lose heart. You can still find plenty of reasonable and affordable auto insurance carriers and we are proud to provide you with the tools you need to find a new policy. Do your best to rebuild your credit so that your rates will go back down and we’ll do our best to help you stay on the road.

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