The Insurance Information Institute (III), states that drivers with a low credit score are more likely to file a large claim, and that it is for this reason that insurance companies charge them more for a policy. Every state, with the exception of Massachusetts, Hawaii and California, allows insurance providers to use credit scores as a determining factor when calculating premiums. Therefore, New York drivers’ credit scores are affecting their insurance costs— whether they know it or not.
Average cost of full coverage car insurance in New York by credit
|Provider||Poor credit||Average credit||Good credit||Excellent credit|
Best car insurance in New York with bad credit
New York drivers with poor credit pay an average of $4,876 a year for car insurance, but the national average for drivers with good credit is $1,674, which is a difference of $3,202 per year.
Though it is splitting hairs, it is technically not your credit score that affects your insurance premium, but is instead your credit-based insurance score. However, the two are based on the same information in your credit reports written by the Big Three (TransUnion, Experian, and Equifax).
This means that information such as on-time payments, debt and types of credit used is used to determine your insurance score. As your credit score determines your creditworthiness, your insurance score predicts your claim-risk.
The categories they sort drivers into are:
The major difference between the two is that a poor credit score can deny you access to loans and lines of credit, but a low insurance score will not deny you access to anything— it might, however, push a certain type of policy beyond your budget. So if you are denied coverage, it will not be because of your insurance score, it will be because of a multitude of factors, such as having too many DUIs or at-fault accidents on your record.
Why does my credit affect my car insurance rates in New York?
The link between a low credit score and a higher frequency of claims is undebatable, but the real question is why. Unfortunately, no one can answer that part. Nonetheless, each decade or two similar studies reappear and come to the same conclusion. The most recent batch occurred in the 2000s.
In 2004 and 2005, the Texas Department of Insurance released an in-depth study followed by a supplemental that concluded that the link between credit scores and claim occurrence was real.
In 2007, the FTC released its own study where the same conclusion was reached. In some of the studies, it was found that drivers with poor credit scores posed a 50% greater risk to the company, and for other types of insurance (such as homeowners) the risk was even higher.
The good news is that if a driver improves his or her credit score, their premium will decrease. However, because insurance companies typically do not review a driver’s profile until just before their policy renewal date, some drivers choose to instead switch providers. This is because when you apply to a new company, they look at your most up-to-date information when calculating your premium.
What other factors impact auto insurance rates in New York?
Your insurance score is only one factor among many that influences the cost of your premium. The true cost of your policy usually comes down to the following:
- Location: Some zip codes are more dangerous than others. Whether it is because of natural disasters, theft/vandalism, or accidents does not matter. If drivers are filing a large amount of claims in a specific area, insurance companies notice and start charging drivers in those areas more for car insurance. Though it is rarely practical, some drivers are able to save a lot of money by moving.
- Driving history: Being labeled a high-risk driver is perhaps the biggest thing that can drive up your premium. This is because numerous speeding tickets or at-fault accidents on your record suggest you will file a big claim at some point in your future. The worst, of course, is a DUI. Get a DUI on your record and you could pay as much as 81% more for car insurance in New York.
- Car: Some cars cost more to insure. For example, a BMW 330i costs $2,225 a year to insure, but a Honda Odyssey only costs about $1,454. Switch a mid-range vehicle and you will save on your premium.
How to get cheap car insurance in New York with poor credit
Think of getting cheap car insurance for bad credit in New York as occurring in two phases.
Phase one: Long-game strategy. Involves improving your credit score and maintaining a healthy driving record because these two will significantly help you over time. (And if you are driving a high end vehicle, consider pairing down to a mid-range car with a high safety rating.)
Phase two: Short-game strategy. Can be done immediately and involves the following strategies:
- Shopping around: Finding the best car insurance for bad credit in New York often boils down to simply shopping around. The reason? Not every company values and penalizes things to the same degree, which is why drivers are often able to get a much better rate by simply shopping around. Shop around with different providers. You will be surprised at how different quotes can be for the same type of policy.
- Comparing discounts: Many companies offer the same discounts, but some companies are often able to beat out their peers when it comes to savings. While shopping for the best discounts, however, make sure you compare both discounts you can take advantage of today, and discounts you will be able to work towards.
- Increasing deductible: Car insurance for poor credit in New York can be lowered by increasing your deductible. A high deductible will decrease the amount you pay each month for car insurance, but it will also decrease the amount you receive after an accident. We suggest you work with an agent to find a deductible that suits your budget and coverage needs.
Frequently asked questions
Will I get a credit check when I obtain an insurance quote?
Finding bad credit car insurance in New York does involve a credit check, but this is true regardless of what type of score you have. The good news is that it is a soft credit check (as opposed to hard). A soft credit check does not hurt your credit score because you are not applying for a line of credit or any type of loan. It is only when you are looking for financing that a credit check hurts your credit score.
Which company is the best company to work with if you have bad credit?
Insurance companies are not like lenders because you will never be denied service because of your insurance score. To find the best insurance company, look at customer satisfaction scores, average premium costs, and amount of discounts.
Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, varied credit tiers and the following full coverage limits:
- $100,000 bodily injury liability per person
- $300,000 bodily injury liability per accident
- $50,000 property damage liability per accident
- $100,000 uninsured motorist bodily injury per person
- $300,000 uninsured motorist bodily injury per accident
- $500 collision deductible
- $500 comprehensive deductible
To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
Credit: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base), and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining auto insurance rates: CA, HI, MA