Will a past bankruptcy keep me from getting approved for homeowners insurance?

A past bankruptcy should not keep you from getting approved for home insurance coverage. Even though it affects many aspects of your financial life, you will still be able to get home insurance from most insurers.

However, one thing that you should expect is that it will impact certain aspects of your home insurance, like the rate you will have to pay for coverage. If you have had a bankruptcy in your past, especially in recent years, you will want to completely understand and be aware of the details of its effects on your home insurance policy.

Read on to learn all about bankruptcy and homeowners insurance and then to find the very cheapest home insurance just enter your zip above to compare quotes for insurance!

Why Bankruptcy Impacts Your Home Insurance

When you apply for home insurance, you will be asked a variety of questions about the home itself, its location and you, the owners. One of the things that insurance companies will want to know about is your credit history. While factors such as claims history; whether or not you smoke; and the type of house you live in are obvious in their importance, the reason for giving your credit history is less obvious.

The reasoning behind the use of credit history in the issuing of insurance is because studies have shown that those with a poor credit history are much more likely to make claims than those with a good credit history. These findings are used as proof for a large percentage of insurance companies in this country who charge more to people with poor credit than those with good credit.

This means that even those with a history of being a responsible customer may find that following bankruptcy their insurance company significantly raises their premiums or may even deny them coverage when the policy comes up for renewal.

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The Date of Your Bankruptcy Matters

Your Chapter 7 bankruptcy will appear on your credit report for 10 years. Your Chapter 13 bankruptcy will appear on your credit report for 7 years. Therefore it is important to know that your bankruptcy is no longer a factor in your home insurance rate if it occurred longer ago than that.

However, if you are within that 10 year window for Chapter, or the 7 year window for Chapter 13, you will find that it does significantly impact your credit score and consequently your home insurance rate.

In fact, if your anniversary of discharge mark passes and your bankruptcy disappears from your credit report, you should look at the prices for a new policy, even if your old one is not about to expire. You may save yourself significantly on your premium by shopping around without the impact of the past bankruptcy.

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How to Deal With the Impact of a Past Bankruptcy on Your Home Insurance

If you happen to have declared bankruptcy at some point in the past 7 to 10 years, it is important to work hard at improving your credit score. Get a secured credit card, or a credit card with a low limit, and use it regularly, paying it off completely and on time. Make sure to make all payments for any accounts on time, so that your credit score will improve. Get a secured loan such as a car loan and be diligent in your payments. Seek professional advice on other ways to improve your credit score. As it improves, you will find that your difficulty in finding affordable home insurance coverage will diminish.

You should also know that every insurance company has different policies concerning the weight they assign to credit scores in the setting of insurance rates. For this reason, it pays to shop around and compare and contrast the different prices out there in order to find the one which relies least on credit scores. In addition, the differing discounts and rates from company to company will make price quotes very different. It is in only by comparison shopping that you can find the best deal.

An easy way to shop around for price quotes is to use an online quote tool. These free tools do practically all the work for you by asking you a series of questions concerning your home, yourself and the type of coverage you want and then submitting the information to a variety of insurance companies that serve your area. Multiple price quotes based on exactly the same information will be presented to you in an easy to use and compare format, so you can make the best decision possible for your home insurance needs. Get started today with our free online quote tool for quick home insurance quote shopping!

Case Studies: The Impact of Past Bankruptcy on Homeowners Insurance Approval

Case Study 1: John’s Journey to Insurance Approval

John, a homeowner with a past bankruptcy on his record, sought homeowners insurance coverage for his new property. Despite his financial setback in the past, he diligently researched insurance providers and their policies. John discovered that some insurers were willing to consider his application, taking into account his improved credit score and financial stability since the bankruptcy.

Ultimately, John was approved for homeowners insurance, highlighting that a past bankruptcy does not necessarily prevent one from obtaining coverage.

Case Study 2: Sarah’s Struggle with Insurance Applications

Sarah, another homeowner who experienced bankruptcy in the past, faced difficulties when applying for homeowners insurance. Several insurance companies denied her applications outright, citing her bankruptcy as a significant risk factor. Despite Sarah’s efforts to rebuild her financial standing, the bankruptcy continued to hinder her insurance approval process.

Sarah’s case exemplifies that certain insurers may have strict policies regarding past bankruptcies, making it challenging for individuals in similar situations to secure coverage.

Case Study 3: Mark’s Success with a Specialized Insurer

Mark, a homeowner with a previous bankruptcy, secured homeowners insurance through a specialized insurer catering to individuals with complex financial histories. The insurer evaluated Mark’s bankruptcy, considering factors like the cause and efforts made for recovery. By leveraging the services of a specialized insurer, Mark was able to secure homeowners insurance despite his past bankruptcy.

Case Study 4: Amanda’s Limited Options

Amanda, a prospective homeowner who had undergone bankruptcy, faced limited options when seeking homeowners insurance. Many mainstream insurance providers denied her applications due to her financial history. Amanda discovered that her choices were limited to certain high-risk insurance markets, where coverage was available but at significantly higher premiums.

Her experience demonstrates that individuals with past bankruptcies may face challenges in finding affordable insurance options and may need to explore alternatives within specific markets.

Case Study 5: James’ Negotiation for Insurance Terms

James, a homeowner with a bankruptcy history, successfully negotiated insurance terms with an understanding insurer. Despite initial hesitations from some providers, James found an insurer willing to consider his situation. By communicating openly and providing supporting documents, James secured favorable coverage terms and premiums based on his improved financial standing.

His case highlights the importance of proactive engagement with insurers and presenting compelling evidence to demonstrate financial recovery post-bankruptcy.

Case Study 6: Lisa’s Rejection and Continuing Search

Lisa, a homeowner who had previously filed for bankruptcy, experienced repeated rejections from insurance companies. Her numerous attempts to secure homeowners insurance proved fruitless as insurers cited her past bankruptcy as a significant liability. Faced with limited options, Lisa continued her search for insurers specializing in assisting individuals with financial difficulties.

Although her journey remains ongoing, Lisa’s case underscores the challenges that individuals with past bankruptcies may encounter when trying to obtain homeowners insurance.

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