Will Bankruptcy Affect Home Insurance Rates?

Some insurers think bad credit makes it more likely you'll file a claim some day. Bankruptcy trashes your credit, so it affects your risk score -- the insurance industry's counterpart to your credit score. Some insurers may decide you're now risky enough you have to pay higher premiums. Finding a company that offers you a better deal may take work.

Bankruptcy hurts your credit because most of your previous debts get wiped out. That goes on your credit report as a lot of unpaid bills. Insurers say customers who pay their bills regularly have fewer claims than customers with a bad credit history. That makes you a higher-risk investment after a bankruptcy.

It's always a good idea to get several insurance quotes before taking out a policy. After a bankruptcy, it's even more important. While some insurers place a lot of weight on credit history, others are more interested in whether you've filed claims in the past. If your claims history is clean, you're likely to get a better rate from them. Insurers don't disclose which method they use, so just keep looking until you find a good price.