Can Bankruptcy Affect Your Home and Auto Insurance Premiums?

Depending on your specific situation, bankruptcy might be the best way to overcome the debt challenges that are making it impossible for you to live the life you want. When you speak with an experienced bankruptcy attorney, they can explain options such as a Chapter 7 debt discharge or a Chapter 13 repayment plan. 

Many people first turn to friends or go online when they consider bankruptcy. Unfortunately, there is a lot of misinformation about the bankruptcy process, and even something that might be accurate in one state is not in another. For example, you might hear that a debtor’s home and auto insurance costs could rise after a Chapter 7 or 13 filing. 

Insurance companies can look at all types of information when determining whether to issue a police and setting premium levels. Many carriers consider a policy applicant’s credit score when assessing their risk of loss. Georgia law prohibits insurers from making decisions to deny, cancel or refuse to renew coverage solely because of credit data. Likewise, premium rates cannot be set exclusively on the basis of a policyholder’s credit score. 

However, the statute does permit insurance companies to use credit history as one factor when making coverage and rate decisions upon application or renewal. Other information must also be used as part of the underwriting process, and the use of credit data must conform with standards set forth in the statute. Adverse actions are not allowed to be based on a report generated more than 180 days from when a policy is first written or renewed. Also, limits exist on how often insurance companies can conduct these checks.

Though bankruptcy can have a negative effect on one’s credit rating, people who file are often surprised at how quickly their score rebounds once they regain solid financial footing. Georgia law permits policyholders to request a re-evaluation by their insurer once their credit standing has improved. A favorable result means that premium hikes stemming from bankruptcy might only be temporary. 

Jeff Field & Associates gives Georgia clients a complete perspective on what life after bankruptcy is like, including the potential effects of filing on insurance costs. To schedule a consultation regarding your particular situation and needs, please call 404-381-1278 or contact us online. We have locations in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur.