Can unemployment cause car insurance rates to be lowered?

Lower your car insurance rates while unemployed by (1) reducing your daily mileage, (2) lowering your coverage levels, or (3) opting for a higher deductible.

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Reviewed byJoel Ohman
Founder, CFP®

UPDATED: Apr 30, 2020

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Here's what you need to know...

  • Along with the commonly recommended steps to reduce monthly bills, you can examine your car insurance
  • You may be able to find discounts you hadn’t realized
  • Raising your deductible will help you get lower premiums

Chances are good that you can lower your car insurance rates to help get you through a period of unemployment.

With the current state of the economy, more and more people are finding themselves facing unexpected unemployment and wondering what they can do to lower their monthly expenses.

Aside from the commonly mentioned changes such as getting rid of a phone line, cable TV, eating in instead of going out, and clipping coupons, lowering car insurance rates is something else that an unemployed individual may want to look into.

Lower your rates by comparing quotes from a list of top insurance car insurance companies, and following the other tips below. Enter your ZIP code into the FREE tool above now!

Should I contact my car insurance company if I lose my job?

In most cases, it will benefit you to contact your insurance company and notify them of your lay off. The majority of people put fewer miles on their vehicles when they are unemployed because they are not driving back and forth to work on a daily basis.

If you can show that you will indeed be driving less, your insurance company may lower your rates.

This is especially true if you have a good driving record and are in good standing financially with your insurance provider.

You need to be careful, though. In some cases, those who are unemployed actually put more miles on their vehicles because they are driving long distances searching for jobs and going on interviews.

If this is the case, it may be best not to notify your insurance company of your job loss.

You will not have to let them know your current employment status again until your policy is due for renewal.

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What if I am looking to purchase a new car insurance policy and I am unemployed?

It can be more difficult to obtain an insurance policy if you are unemployed, but not impossible. Many insurance companies see those who are unemployed as being more of a risk to insure.

They fear that monthly payments will not be made and, in the event of an accident, you may not be able to cover the cost of your deductible.

Your best bet in this situation is to shop around. Get several quotes from different companies and compare the policies. While no specific companies specialize in insuring the unemployed, you will find that some are more understanding of your situation than others.

What else can I do to lower my car insurance rates if I am unemployed?

There are many ways you can lower your insurance rates if you find yourself unemployed and in a situation where you need to lower your bills. Insurance companies provide several incentives and discounts that you can potentially take advantage of.

There are also more drastic measures you may need to take temporarily to afford insurance while in your current situation. The following are some of the ways you may be able to lower your rates.

  • You can reduce your coverage to liability only as opposed to full coverage, or comprehensive insurance, which will save a lot of money as long as you do not total your car.
  • Consider reducing the number of cars in your household. Perhaps you only need one car if you are not commuting daily to a job.
  • If you cannot reduce the number of cars you may be able to trade in your vehicle for one that costs less to insure. More conservative, less sporty, cars are usually less expensive when it comes to car insurance.
  • Consider opting for a higher deductible in return for a lower premium.
  • Perhaps you have added some safety equipment such as a backup camera or anti-theft device. By notifying your insurance company of these upgrades, you could save a lot of money.
  • Do you have your car, homeowner’s, and life insurance all with different companies? Consider bundling all of your insurance with the same company. Most companies offer significant discounts for bundling all of your policies with their company.
  • If you live in an area where public transportation is an option, consider lowering the number of miles you drive annually by taking public transportation more often.

While finding a new policy while unemployed can be a challenge if your current policy comes with a high premium you may want to shop around and see what others will offer you.

Even if you do not ultimately switch companies knowing the rates of other companies may give you some bargaining room with your current provider.

As you can see there are many options if you find yourself in a situation where you need to reduce your monthly payment due to a job loss.

You should start by reviewing your current policy and then contact your provider to determine the route that is best for you to reduce costs.

Are you looking for a new insurance policy or want to find a less expensive provider? Get started now comparing car insurance rates from several companies by simply clicking here and entering your ZIP code!

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