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.
Why Rates May Rise
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.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.