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Car Insurance For The Unemployed

09 Apr, 2021
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Being out of a job is tough stuff, and having to worry about insurance cover makes life a lot tougher. As a result of economic turmoil and layoffs, a huge number of people are out of work. Getting through this challenging time could be an uphill task. But don’t despair!

When someone’s out of work, cheap car insurance for unemployed makes sense. But picking out the right deal involves the right amount of facts. Without correct facts, getting excellent unemployed car insurance could be more challenging.

In this piece, you’ll get access to top tips that’ll assure a soft landing in these trying times. Also, several other tips to ensure you make no mistakes due to the new status will keep your cover intact.

How Does Being Unemployed Affect Car Insurance?

Being unemployed isn’t put in play by insurers, but several factors linked to the new status could spell trouble.

Also, it’s not all doom and gloom as unemployed drivers could find some relief from these factors. And among the myriad of issues unemployment can cause for your car insurance, here’re the top three;

Discounts based on occupation

Even though unemployment doesn’t get frowned at by insurers, several job titles attract discounts unemployed policy holders don’t.

For example, a serviceman, registered nurse, or teacher usually qualifies for a discount from several providers. Such benefits get eroded fast if you wind up unemployed all of a sudden.

Credit index

Maintaining a high credit score is essential, even more so when there’s no job to go to at the moment. Falling behind on several credit payments could cause a dip in your credit score.

And when your payments don’t keep coming in, your credit score takes a hit. Poor credit scores affect your insurance premiums as insurers no longer see you as less likely to file for claims.

Road frequency

Being out of work means less commuting to work and back. If you fall into such a category, then there’s some good news! Lesser use of your vehicle could mean a lower premium rate.

On the flip side, if you get into a massive rush for a new job and use your car more, expect your rates to go up.

Other factors that could affect your insurance

Loss of claims

Even if policy buyers are out of work, policy providers may initiate a price spike to cover losses. Several insurers suffer losses from doling out claim payments.

Tariff changes

Spikes in tariffs could happen anywhere and at any time. For example, an increase in the price of car parts required to fix your vehicle could cause a rate increment. Also, changes to several other factors could cause policy providers to slap a price increase on your premiums.

Should I Cancel My Car Insurance?

It would be unwise to cancel your policy due to unemployment. A lot of adverse stuff could crop up with such a hasty move. Here’s some stuff that could directly result from canceling your insurance cover;

Higher premiums for a new policy

When you’re registering a new policy with another company, your preferred provider takes a look at your previous company’s records.

If your car has remained uninsured for long periods, your new premiums may be higher than your previous provider’s. The reason is, a different insurance company could see you as a potential insurance risk.

Aside from a higher premium, you may not have access to several discounts. With so much to pay for, it could be damaging to get a policy after canceling outright.

Most states in the US mandate an insurance policy to ply their roads. If you get caught without a car policy cover, legal issues could weigh you down.

Mandatory requirements for an insurance policy is serious in America. In some states, drivers get penalized for driving to register their vehicles from home without a license. So, even if you’re licensed and whatnot, you’ve got to maintain your insurance policy no matter what.

Financial backlog

If you manage to come unscathed from a car crash involving your vehicle, it could mean trouble. Without an insurance policy, payment for repairs and bodily damage could run into tens of thousands of dollars.

And if you’re unemployed, where’s the money going to come from? Apart from the aforementioned reasons why it’s a bad idea to cancel your policy, this rings true the most.

So, if you’re thinking about dumping your insurance policies altogether, think again.

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What Relief Is Available for Unemployed Drivers?

Car insurance for unemployed people is challenging. In periods of economic uncertainty, it’s expected for many unemployed drivers to default in their premium payments. That’s why many insurers offer relief packages during periods of economic downturn like;

Grace periods

Instead of offering seven-day to one-month grace periods, some policy providers offer 90-day periods or more in challenging times.

Consider the COVID – 19 pandemic, for example. Several policy holders couldn’t keep up with premium payments for several months, and insurers had to extend grace periods. So, if there’s a harsh climate out there, talk to your insurer. They’ll likely listen and help you out.

Cancelation halts

Another way policy providers deliver relief to unemployed drivers is by halting cancelations under special conditions.

Speaking with your current provider may reveal if a pause can get initiated on your payments till you bounce back. And if you continue with that provider, the gap may not be put into consideration for renewals.

What Insurance Providers are Best for Unemployed Drivers?

Although there’re tons of insurance companies out there that promise great deals, here’re the top nine providers;

  • Allstate
  • American Family
  • Farmers
  • GEICO
  • Nationwide
  • Progressive
  • State Farm
  • Travelers
  • USAA

Car Insurance Discounts for the Unemployed

Here’re several discounts your provider could have in store, even if you don’t have a job at the moment.

Security features

Are anti-theft tech, alarm systems, vehicle recovery systems, etc. fitted on your vehicle? Then you’re in luck!

Several insurance policy providers will offer discounts to drivers with safety features on their vehicles. Factory-fitted safety equipment limits the expected damage if a vehicle gets involved in an accident.

And insurers consider this and may likely lower your premium rates.

Automatic payments

Choosing to pay premiums automatically could seem like nothing, but there’s a discount in it for you. Opting for automatic payments attracts a discount. And if you choose to pay off a full policy period at once, you’ll save a lot more cash.

Defensive driving

Avoiding accidents isn’t easy. But since you’re out of a job, you must avoid accidents at all costs. Keeping a clean driving record significantly drives your premiums down. And when you don’t have to pay more for insurance cover, you’ve got more cash in this hard time.

Good credit discounts

As mentioned earlier, keeping a stellar credit score is essential in getting a discount on your periodic premium payments.

Group discounts

There’s strength in numbers, and being part of a group helps your premium rate when you’re out of work. Even though group policies have their cons, you could save more over time with a group auto cover.

Increasing your out-of-pocket expenses

Paying more in deductibles could seem insane right now. But if you’re a good driver, it makes perfect sense. Increasing your deductibles mean you’ll have to pay less in premiums over time. But if an accident occurs, you could bear the bulk of expenses.

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