The Best Car Insurance for Credit Challenged Borrowers

Since a car loan requires full coverage auto insurance the findings of a recent JD Power and Associates customer satisfaction survey should help borrowers with problem credit
The Best Car Insurance for Credit Challenged Borrowers
Our experience

When putting together a budget consumers with deficient credit need to know which kind of car insurance to shop for before signing on the dotted line for a car loan.

Here at Auto Credit Express we know this because we’ve spent the past twenty years helping car buyers with bad credit looking for online auto loans find those dealers that can best help them get auto loan approvals. Because of this we know that car shoppers need to consider not just the loan payment but also the cost of the full coverage auto insurance – a requirement of all high risk lenders.

But first, let’s take a look at the different types of auto insurance coverage.

Partial Coverage Auto Insurance

Partial coverage insurance is probably best known by the initials “PLPD.”. PLPD stands for “public liability and property damage”. This is basic insurance and only covers the damage a vehicle might cause in an accident. It also will typically satisfy the minimum amount of coverage required by states. The biggest drawback to PLPD insurance is that it doesn’t cover any damage to the vehicle.

Full Coverage Auto Insurance

In addition to the basic coverage of a PLPD policy, full coverage auto insurance adds both comprehensive and collision protection. This type of policy not only covers the damage a vehicle might cause in an accident, but also the damage to the vehicle, itself.

To make this additional protection more affordable, both comprehensive and collision protection are available with different levels of deductibility. The “deductible” is the amount that the insurer contributes to the total repair bill. For example, in an accident that resulted in $2000 in damage to a vehicle with a policy had a $500 deductible amount for collision coverage, the policyholder would contribute $500 towards the cost while the insurance company would pay the $1500 balance. In another scenario, if total damages were under $500 the policyholder would be responsible for paying the entire bill.

An important aspect to consider is that as the amount of the deductible rises, the cost of the coverage decreases. That is, the higher the deductible, the lower the premium.

Lender requirements

To protect their investment, banks and other lenders always require borrowers to have full coverage auto insurance. They’ll furnish the minimum liability levels while it’s up to borrowers to set the deductible amount. In this case it’s a balancing act. The deductible shouldn’t be too low as this might make the monthly premiums unaffordable. On the other hand, if the deductible is too high it could be unaffordable if an accident does occur.

Choosing the insurance company is also up to the buyer, which brings us to today’s subject: the most recent Buyer Satisfaction study from J.D. Powers and Associates.

J.D. Power Auto Insurance Customer Satisfaction Survey

“Among customers whose insurers meet or exceed all their service expectations, modest rate increases appear to be well tolerated, provided the rate adjustment amounts to less than $50,” said Bowler. He adds that, “Our research shows that most customers who shop for insurance ultimately do not switch. However, among those who are driven to shop because they are dissatisfied with the service they receive, three of four will keep shopping until they find a new insurer.”

The study considers customer satisfaction in five areas: interaction, price, policy offerings, billing and payment, and claims.

Here are their lists of insurers by region and ranked according to overall satisfaction:

The Bottom Line

The latest Power rankings should help car buyers – even those with credit issues – find the best insurer to fit their needs in their particular region of the country. At the same time, it’s important to remember that insurance companies in many states are allowed to base their rates, at least in part, on FICO scores. This means that as a borrower’s credit scores rise, the rates they pay should also improve.

One last tip: Auto Credit Express matches people that have experienced credit difficulties with new car dealers that can offer them their best opportunities for approved auto loans.

So if you’re ready to reestablish your credit, you can begin now by filling out our online auto loan application.

Posted on August 18, 2013 by in Car Insurance
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