Does Bankruptcy Affect Car Insurance?

Updated March 23, 2017

When you file for bankruptcy, a notation is placed on your credit reports. A growing number of auto insurance companies check the credit of potential and existing customers, so bankruptcy can affect your car insurance.

Expert Insight

Credit reports are difficult to change when there is a negative bill paying history such as bankruptcy, according to Joseph Annotti, a spokesman for the Property Casualty Insurers Association of America.


The issue of credit ratings determining car insurance rates has been debated nationwide through consumer advocates interviewed in newspapers such as USA Today. Insurance agency representatives justify their position by claiming poor finances can lead to unnecessary claims or bad driving.

Time Frame

If you filed Chapter 7 bankruptcy, it will appear on your credit report for 10 years. Chapter 13 bankruptcy cases remain on your credit report for seven years.


If you filed Chapter 13 bankruptcy you will have to repay most of your debts under a court-supervised repayment plan. However, Chapter 7 bankruptcy legally forgives almost all consumer debts.

Fun Fact

About 92 per cent of insurance companies use credit scoring to determine auto insurance rates, according to Nationwide.

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About the Author

Stephanie Mojica has been a journalist since 1997 and currently works as a full-time reporter at the daily newspaper "The Advocate-Messenger" in Kentucky. Her articles have also appeared in newspapers such as "The Philadelphia Inquirer" and "The Virginian-Pilot," as well as several online publications. She holds a bachelor's degree from Athabasca University.