Filing bankruptcy can impact a variety of areas of life. Some people are able to remain in their homes after filing. This is not uncommon in Chapter 7 or Chapter 13 filings. This happens if the home's equity is low, and there is an allowance within state bankruptcy laws.
However, if remaining in the home, owners still need to maintain home insurance. Most mortgage contracts require it. How will the bankruptcy impact your ability to do this?
Will an Insurer Cancel Your Property After Filing Bankruptcy?
In most cases, the answer is no. Keep making payments on time with your insurance company. Do not let your policy lapse. This helps ensure that your current insurer will continue to provide coverage. If you do lapse, contact your agent immediately. Or obtain a new policy. Maintaining coverage is critical in all situations.
Will the Insurance Rates Go Up?
The bankruptcy alone may not hurt your insurance rates. However, some insurance companies use credit scores to determine how much risk you present to them. If you have a low credit score due to the bankruptcy, this can make your rates a bit higher. This should not impact you much if you make payments on time and do not let your policy lapse.
Can You Switch Insurers After Bankruptcy?
Yes. There is no reason not to consider multiple providers if you want a better policy or a different rate. Request quotes from other insurers. Inquire about discounts. You can do this before you cancel an existing plan. And, you can do it at any time during the year. You usually do not have to wait for your policy to end. The new insurer will provide you with a rate that includes your credit score (in some cases). This can give you confidence in making the switch. However, be aware, you may face cancellation fees or other costs if you end an existing policy mid-term.
What Should You Do After Filing Bankruptcy?
From a home insurance standpoint, continue to make payments on time. Be sure your policy remains in good standing. It also helps to work to rebuild your credit. Using credit wisely will help increase your credit score. This, in turn, can often help you keep insurance rates low.
It is possible that bankruptcy will impact your credit and insurance. However, home insurance agents want to be sure you can still make your payments. Prove that and the insurer is not likely to cancel your policy. Need more resources for home insurance? We can help. Call us at (610) 269-4500.