Buying Insurance with a Criminal Record
In the United Sates almost 25% of the population has a criminal record. Of those individuals, almost 36% have been convicted of a felony. Past criminal records often present obstacles in securing insurance coverage. Since insurance is regulated at the state level, every state will allow a different amount of latitude to insurance companies when it comes to underwriting for criminal records. Insurance is a risk-based business and if your conviction is associated with a higher risk of claims, it can cause you difficulty finding affordable insurance. This week, we will briefly look at how this can affect buying auto, home and life insurance.
Generally speaking, auto insurance will be the easiest type of insurance to purchase. Every state requires, by law, vehicle owners to insure their vehicles. Different companies look at a criminal record differently. Some standard companies will have a high-risk rate for those with a large number of speeding tickets or felony convictions. They will generally be comparable to companies that specialize in high-risk drivers. However, not all convictions are the same. DUIs, violent felony convictions or felony convictions including an automobile may keep you from buying auto insurance from any standard company.
The good thing about standard companies is that they will generally move you to a standard rate after a period of time if you qualify. This will be based on your claims history, Motor Vehicle Report and credit score. One thing to remember is even when a standard company is willing to insure someone with a criminal record; they will generally only do so after a certain period of time after incarceration. Most companies will require at least a three, five or seven-year period after incarceration before quoting a policy.
Homeowner’s insurance can be a whole different matter. Not only does your homeowner’s policy protect your home and personal property but it also covers your personal liability. Let’s take a brief look at both the property and liability issues. On the property side, several types of convictions can make it nearly impossible to find insurance. Convictions for arson, running a meth lab, or use of explosives can be too high a risk for most companies to consider. The second area of challenge for convicted felons is on the personal liability side of the policy. Since the company can become legally obligated to pay for bodily injury or property damage you cause, they may be very concerned about the type of crime for which you were convicted. Those convicted of fraud, violent crimes, crimes involving weapons, and crimes against property may keep you from getting homeowner's insurance with many companies.
Another issue can be your credit score. Your credit score plays a very important role in purchasing homeowner’s insurance. Many times a conviction and incarceration can destroy your credit rating and it can take many years to repair the damage. This, along with your conviction, can make it almost impossible to get coverage.
It is nearly impossible for someone to get life insurance while incarcerated. Depending on the crime, it may be almost impossible to get life insurance when you get out. Many life companies do not and cannot rate for individuals with certain types of convictions. For this reason, you should work with a life insurance agent that works with a large number of companies and has access to companies that provide coverage for hard to place individuals if you have a felony criminal record,.
When looking for insurance, understand that a criminal record can sometimes make it very difficult to find coverage. Those companies that are willing to offer you a quote will look at certain criminal offenses differently than others. Even when standard companies are able to give you a quote you may not receive standard rates. Also keep in mind, not every agent or agency will have access to a company that can provide you a quote. This has nothing to with their desire to serve your insurance needs. Rather, their inability to provide coverage is directly related to the underwriting eligibility guidelines for the company or companies they represent. If you a question on this subject, feel free to contact our advisors.