Can Losing My Job Raise My Car Insurance Rate?

Unemployed woman stressed as she looks over her auto insurance bill

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Losing your job can be extremely difficult. Life is full of ups and downs. It may be surprising that major changes in your life like having a baby, selling your home, or even losing your job can all have an effect on your insurance. Now you may be wondering how it could possibly have an impact on your car insurance. Well, you can rest assured your ex-boss certainly will not be notifying your insurance carrier. However, your credit score could come crashing down pretty quickly and your insurance carrier could find out about it and raise your rate.

Your Credit Score Matters

Most likely you are receiving a financial stability discount on your car insurance. Nearly all insurance carriers and almost all states allow insurance companies to rate drivers based on their credit score. If your credit score takes a large dip due to a job loss, you could see a big spike in your car insurance payments. It is definitely something to think about. There really isn't any way to hide from this rating system.

When you are in a tight situation the best thing to do is to cut out the items you can live without. Do what you can to keep up on the bills that directly affect your credit like your mortgage, credit card bills, and car loans. Try to make arrangements to stop late payments from affecting your credit score. Reduce your car insurance to the bare minimum for the period of time you are without work.

Getting the Best Financial Stability Discount

You do not have to get the best financial stability discount in order to benefit. A fair credit score is certainly better than a bad one. Unfortunately, moving from a preferred score to a fair score can be painful none-the-less. Research job search advice and try to replace your job as quickly as possible. Hopefully, you can minimize the effects a job loss can have on your credit score.

It Can Take a Long Time to Repair Your Credit Score

Your car insurance will not be affected immediately. Car insurance credit scores are typically evaluated every time your policy renews. So it will take some time to register your lower rate, however, it will also take some time to verify your score has gone up. If you think your credit score has improved, ask your insurance agent if it can be checked. Your agent will then request the underwriter to run your credit score information.