Unfortunately, many of us may go from gainfully employed to unemployed at some point in our lives. While losing your job can be a large source of stress, it doesn’t have to negatively impact your car insurance rates. Learn how to maintain quality insurance coverage even when you’re unemployed.
What Happens to Your Car Insurance If You Lose Your Job?
If you suddenly lose your job or experience a period of unemployment, will that impact your car insurance rates? The short answer is not really. In general, insurance companies don’t consider your employment status when calculating your premium. Unless you can’t pay your premium, you probably won’t see any changes in your car insurance policy if you lose your job.
However, there are some exceptions to this rule. If you’re receiving a discount based on your job title—for example, you’re a nurse or a teacher—then losing your job would mean losing your discount as well. This would raise your premiums, but you’ll still have insurance if you can pay the new premium every month.
Do You Have to Tell Your Insurer If You Lose Your Job?
That depends! Unless being laid off affects your ability to pay your premium, you don’t necessarily need to notify your carrier when you lose your job. However, if losing your job is going to affect your ability to continue paying for coverage, you should ask your insurance company about potential discounts or reducing your coverage. Here are some questions to ask your insurance company if you get laid off:
Can I raise my deductible?
- Comprehensive insurance policies require a deductible—the amount of money you pay out of pocket before your insurance covers the rest. Raising your deductible will lower your monthly insurance rates, but it’s important to keep your deductible realistic since you’ll have to pay that amount if you get into an accident.
Can I switch to usage-based insurance?
- Usage-based car insurance is a great option for individuals who don’t drive very often. If you just lost your job and you aren’t commuting to work anymore, you’ve probably drastically reduced the number of hours and miles you drive. Since usage-based insurance policies are based on the number of miles or time you spend driving, you could save money with this type of policy.
Should I reduce my coverage limits?
- The higher the coverage limit—the maximum amount your insurance will pay for a covered claim—the higher the premium. If you lower your coverage limits, your premiums will decrease along with them. The lowest coverage amount you can select varies by state.
Can I Still Get Car Insurance If I’m Unemployed?
Yes, you can still get quality car insurance even if you’re unemployed. While a multitude of different factors are taken into consideration when calculating your premium, your employment status isn’t one of them. You won’t be asked to supply any proof of employment or documents about your employment status when you’re getting quoted for a policy.
Should I Cancel My Coverage While I’m Unemployed?
While being unemployed may tempt you to cut costs wherever you can, discontinuing your insurance coverage may lead to greater insurance fees in the future. Canceling your car insurance without switching to a different insurance plan can lead to a lapse in coverage. When calculating your premium, insurers look to see if you have any gaps in coverage on your record. If you do, your insurance premiums can increase significantly.
Studies show that drivers with lapses in coverage for 30 days or less see their insurance premiums increase by 8%, while drivers with lapses in coverage that last for over 30 days can pay a whopping 35% more for premiums. This increase in future insurance prices can cancel out any financial gain you get from discontinuing your insurance now. In addition, if you’re still driving during this period, you need insurance to be in accordance with the law.
Car Insurance During Unemployment with The General
If you’re currently unemployed, you’re probably saving money anywhere you can, including your insurance policy. While you may feel the need to turn to a shady car insurance company to save money, get an insurance quote from The General and you’ll see that quality coverage can come at a low cost. If you want to learn more about saving and budgeting, visit our car insurance blog.