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
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
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
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
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
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
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.