Insurance has been around for a few hundred years. Today, there are insurance policies for homes, rentals, smartphones, recreational equipment, and virtually everything else imaginable. Insurance agencies make money by charging customers monthly premiums. They profit if the aggregate total of money collected exceeds how much money was spent out to cover damages.
It seems like everybody incurs at least one bout of financial difficulty in their lives, if not years on end of money problems. Some people make bad financial decisions that hurt their long-term prospects of getting favorable loan terms, leases, and even insurance premiums. Let's dig deeper into five ways that financial decisions can affect your car, home, life, and other types of insurance premiums.
Leasing or financing a car
Many people opt to lease or finance their vehicles rather than purchase them with cash or trade-ins. Doing so gives customers more time to pay, although it often results in high-interest charges. Not paying leased or financed vehicle payments on time may result in negative credit action. This shows on credit reports, examined by insurance agencies in determining financial risk for particular applicants. It is important to note that as of October of 2023, interest rates for purchasing new vehicles are much higher than we have seen in the past. Be sure to keep this in mind when looking to lease or finance a vehicle.
Bankruptcy
Many Americans take on large piles of debt, unable to reasonably pay it back. Sometimes, when debtors have no way of satisfying their outstanding balances, they file bankruptcy with a federal court. Bankruptcy is a means of identifying and rationing out assets to creditors with federal protection. Overwhelmed debtors usually talk to a bankruptcy attorney before pursuing this option, as they help people make sound decisions related to bankruptcy.
Not paying bills on time
Sometimes, we can't afford our bills, and that's OK. However, failing to pay a bill just one time can lower your credit score, potentially raising premiums.
Money helps us live better lives, for the most part. Unfortunately, many people experience difficulties in their financial lives. Making bad decisions now can hurt how much you pay for insurance premiums the rest of your life. Be smart in making money moves, as they often affect more aspects of life than you realize.
Selecting a cheap, generally unknown insurer
Large insurance companies are typically more averse to risk than smaller or newer providers. However, these relatively unknown insurance companies are usually cheaper than more established options. While it might seem like a good idea in the interim to lower your insurance premiums by trusting a no-name insurer, future insurance providers may raise premiums to cover you. There's also an added risk that those companies aren't generally looking out for your best interest.
Opting for low monthly payments
People don't always have emergencies caused by accidents, breakdowns, or theft. As such, many opt for insurance with low monthly premiums and ultra-high deductibles. If something bad happens and you can't afford the deductible, that means no insurance coverage for you.
If you're wondering if your premium is too high you can always reach out to our personal lines team or fill out the short form below for a free multi-carrier quote to see if you're getting the best deal at this time.