Posted on: 24 April 2019
Most people realize that filing for bankruptcy can affect their credit in a way that is very negative, but this is certainly not the only effect bankruptcy can have on a person. Bankruptcy can also affect other areas of life, and one thing you might be wondering is whether filing for bankruptcy will affect your homeowners insurance. This is a good question to evaluate, and there are several things to understand about this.
Bankruptcy typically does not affect insurance
When you file bankruptcy, there will be results and effects from it, but there really should not be any effects involving your insurance policies, including your homeowners insurance. Bankruptcy has no effects on home insurance or any other type of insurance.
The effects of bankruptcy are secondary with insurance
While bankruptcy in itself does not affect insurance, there is a secondary effect to know about. One of the main consequences of bankruptcy is the negative effects it will have on your credit. This negative effect on your credit could result in changing your home insurance, but this is only the case with some companies. Some insurance companies factor in a person's credit when calculating premiums. If your insurance company does this, you may see an increase in your premiums after filing for bankruptcy, simply because your credit will worsen after bankruptcy.
The steps you can take to protect your insurance
Whether you file for bankruptcy or not, there are certain things you can do that will help you protect your insurance policies. The first thing is to never allow your policy to lapse. A lapse in coverage will result in an increase in risk, and this means you will pay more money to get coverage. You can prevent lapses in coverage by setting up automatic payments for your insurance premiums or by using an escrow account with your mortgage company.
Secondly, if you decide to switch insurance companies, always get a new policy in place before canceling your old one. By doing this, you will not have to worry about whether or not you can obtain a new policy, as you will already have on in place before you get rid of your old policy.
Finally, use caution when filing claims. In other words, do not file a claim for every small problem you have. File one only if it is absolutely necessary.
If you need any type of insurance or would like a quote for insurance, contact a company like Gulf Coast Insurance that offers homeowners insurance in your state.Share