Car Insurance For The Unemployed

Unemployment is a tough thing to face, but no matter what, you should not sacrifice your auto insurance coverage to make ends meet.

Almost every household today owns at least one car. And with the number of vehicles swarming the roads today, accidents have become more common an occurrence than ever. These accidents can result in physical damage(s) to the car or bodily injury to the driver/passenger(s); and any other liabilities arising from it.


Unemployment can have a huge affect on your ability to pay your auto insurance bills. How can you lower these costs to make them more affordable?

Any of the aforementioned, more often than not carry with them quite an expense; mainly because cars cannot be maintained/repaired or replaced as cheaply as our clothes. And this is where car insurance comes into play. Its role is to provide the policy-holder with financial protection against the damages arising from car collisions and car-thefts.

Basis of Car Insurance Premium Charges

Though there are a number of companies offering car insurance policies, they all base their premiums on the following factors:

  • Vehicle Classification: Manufacturer; Model; Age; Mileage; and Value.
  • Coverage: Type; Extent; Deductibles; etc.
  • Driver: Age: Gender; Marital Status; Traffic violations/Driving record; Occupation etc.

Why Employment Status? …And How?

The insurance premium on your car is directly proportional to the risk that it is at. The higher the amount of time your car is on the road, the higher is the accident risk that your car is prone to. And this amount of time depends on the distances you travel; to and from work place, or for work itself… which obviously depends on your occupation.

Your insurance premium would similarly be affected when your occupation status is that of ‘unemployed’ too. And the “how” of this actually depends on the “why” itself; and would vary from one insurer’s perspective to another.

From one perspective, the insurer would expect a person without a job, to be traveling less; as he/she wouldn’t be required to travel to any work place regularly. This would mean putting the vehicle at a lower risk; and as premium depends on regular mileage as well, would thus attract a lower rate.

Then there are other insurers, who believe that unemployed clients would be traveling all the more; as
a)They would have a lot more free time on their hands and would travel around more; in comparison to an employed client who would spend 8 hours of the day at office.
b)And if they are in-between jobs, they would be spending a lot more time commuting, to attend job interviews etc; and probably even from one state to another.
Either of these would mean more time on the road, an increased risk to the car and a higher mileage. And thus, would attract a higher rate of car insurance premium.

Existing Insurance Vs New Insurance

If you happen to lose your job during the course of your car insurance policy, it is your rightful duty to inform your insurance company of your “change in circumstance”. The same is true if you happen to find a new job during that time.

Failing to do so can make your car insurance policy void, by default. And you would thus not be able to lay any claim, in the event of a mishap; even if you have been paying your premium without fail.

Based on your insurer’s perspective on your job loss (as mentioned above), he may choose to either increase or decrease the premium charges on your existing policy. However, you can rest assured that your policy will not be cancelled.

In case the company decides to hike the insurance premium, you will have the option to switch your insurer; regardless of the scheduled policy ‘renewal’ time. However, it is also important to remember that finding a new company to insure your car during your unemployment period may not be impossible, but it isn’t an easy task either.

Many-a-companies may only offer you a higher quote; and then there may be those that won’t offer you insurance at all. Irrespective, it is would be wise to furnish your true employment details when applying for your car insurance quote. Because not only will false information invalidate your claim; but would also constitute a case of “fraud”.

Unemployment and Insurance Cuts

The period of unemployment is a tough phase for anybody. The bills don’t stop pouring in, but the money does. However, no matter the extent of financial crisis, one should not be tempted to let go of car insurance altogether. Firstly, this is so because third-party insurance is anyway a legal compulsion. And secondly, in the event of a crash, you may only end up with (a lot) more expenses on your hands, than what you would pay as insurance premium charges; the very thing you want to stay clear off during your unemployment period.

However, they are ways in which you could expect to lower your car insurance quotes. But you needn’t wait until you get laid off in order to put these into effect.

  1. Park and drive carefully; for better driving history.
  2. Reduce the number of cars you own; lesser cars equals lesser premium.
  3. Switch to a car that attracts lower premium.
  4. Do not modify your car; it attracts a higher premium.
  5. Fit your car with a security system.
  6. Keep your mileage to a minimum.
  7. Have all your insurance policies with a single company to get a discount.
  8. Choose a policy with appropriately minimum amount of coverage.
  9. Compare and contrast rates of different companies.
  10. Finally, try your best to find a job!!

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