How to Get Car Insurance if You Are Bankrupt

Car insurance is a mandatory form of insurance that is required by law. You will not be allowed to drive your car without at least basic car insurance. Car insurance will also provide you with peace of mind.

If you have comprehensive coverage, you may be protected if you are injured in a car accident. Your insurance provider may cover your medical costs and may even help cover your lost wages.

Car repairs may also be covered. The damages incurred to someone else's car or property may also be covered, depending on your car insurance package.

Also, if you are deemed responsible for the accident, your provider may cover your legal fees if the plaintiff decides to press charges against you. Not having insurance means you will need to cover all the costs of repairing your car and any injuries.

You may also have to cover another party's legal, medical, and auto-repair costs if multiple cars were involved in the accident. You may also be subject to various fines and penalties that may cost you several thousand dollars.

Your car may be impounded, and you may lose your license for up to a year if caught driving without insurance coverage. Here, however, our focus will be on how to get car insurance if you are bankrupt.

How Bankruptcy Affects Your Car Insurance

When your insurer tries to determine how much of a risk you are, they will assess several variables, including your age, gender, driving record, type of vehicle, location, and credit score.

Once thoroughly assessing all the variables, they will calculate a monthly premium for you.

If you have a low credit score or have recently declared bankruptcy, your provider may charge a higher premium to compensate for the additional risk they will need to take to accept you as a client.

Furthermore, drivers with multiple convictions may be more likely to have their car replaced or fixed in the future, hence, they will be charged higher car insurance premiums.

How to Get Auto Insurance if You Are Bankrupt

Bankruptcy in Canada works differently than in many other countries. That is, it deals with unsecured debts. The debt in question will be considered secure if your automobile is financed via a car loan.

In other words, if you finance or lease your car and then file for bankruptcy afterwards, you will be allowed to continue using it, provided that you are current on your lease or loan payments.

At this point, you may be wondering what happens if you file and own your car outright? The provincial exemption will vary from province to province.

Older cars are more likely to qualify for an exemption. Your trustee will be responsible for reviewing your car's black book value. If you are fortunate, it will fall within the exemption limit. If it exceeds the limit, it will be deemed property that can be seized to help pay back some of your creditors.

However, they may provide you with the option to buy out the realizable portion over time so that you can retain ownership of your vehicle.

As for getting insurance after declaring bankruptcy, we would suggest that you start by seeking out nonstandard insurance companies. You can also try contacting high-risk insurance firms.

You can also try speaking to a financial support representative who works at your local community center. They will offer their services free of charge and may be able to refer you to a car insurance provider who accepts high-risk applicants.

It is also possible to obtain auto insurance online. You can sign up for a policy directly online as an alternative to signing up with conventional providers.

It should also be noted that auto insurance programs are available online and offer person-to-person rates for people who need them. Auto insurance online is an option many bankrupt individuals take to obtain the coverage they need.

Ways to Improve Your Credit Score

A credit monitoring service can help ensure you pay your bills on time. Doing so will dramatically improve your credit score over your lifetime.

We would also recommend obtaining a credit card with excellent credit score benefits and low-interest rates. You should also take the time to read the fine print outlined in your new policy.

You may discover that your provider may be willing to lower your premiums if you can significantly improve your credit score. Avoid the temptation to open new credit accounts, and try to bundle all your policies under one umbrella to obtain discounts or loyalty rewards.

Certain companies may also provide discounts if you can refer a fellow client. They may also offer you certain discounts if you own your property or graduate from a safety driving school program.

We would also suggest that you get rid of any coverage that you deem unnecessary. For example, depending on your circumstances, you may not require medical payment coverage if your health insurance is superb.

You may also not require auto replacement coverage if you drive an older automobile.

Taking the First Step

We recommend you call your car insurance broker as soon as possible to discuss your options. You should also obtain a free, no-obligation car insurance quote to avoid any fiduciary issues down the road.

If you have no option but to declare bankruptcy, you should not lose hope. Many different services and insurance packages are available that will allow people who have declared bankruptcy to obtain still the auto insurance coverage they need.

Jessica Coates is a blogger in Toronto. She graduated with honors from the University of British Columbia with a dual degree in Business Administration and Creative Writing. Jessica Coates is a community manager for small businesses across Canada. When not working, she leisurely studies economics, history, law and business solutions.