Q: Will getting new car insurance affect my bankruptcy?
I’m in a chapter 13 bankruptcy, and just want to know if I need to report new car insurance? I’m a year into my payment plan. Our insurance is outrageous and want to find a new company. Also I know most companies do a soft credit pull, will that affect anything? I’m in middle district Alabama. Can they see I changed companies?
A:
Find a more reasonable insurance carrier. I have changed twice in the past two years for just that reason (I don't live that far from you) and they are competitive. Be sure you have adequate liability limits and equivalent uninsured motorist coverage. It's always the other guy who has no insurance!
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A: You are free to change your auto insurance. Make sure, however, that you comply with any requirements of your auto lender to have certain coverages on the vehicle. Credit Unions will often require higher policy limits and coverage than commercial banks. Go through a local insurance agent who can advise you on all of the various policies and coverages available. You may want to consider gap coverage in case your vehicle is determined to be a "total loss" after an accident. You may also want to consider uninsured/underinsured motorist coverage ( in case the other driver is uninsured, or you are the victim of a hit and run). An insurance umbrella policy can also provide you and your family with additional coverage for injuries and losses which may be excluded by your policy. Keep in mind that when you are involved in an auto accident, you are in most cases limited to the insurance coverage available. The insurance company involved in settling a claim will require a release of any further claim(s) in exchange for issuing the settlement funds. Most auto claims are settled, so it is important to make sure you are adequately covered.
A: You should be fine. However, you may need to notify your chapter 13 trustee if this change will impact your disposable income.
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