Having a less-than-perfect credit history can make finding the right home insurance policy slightly more complicated and, in some cases, more expensive. Many homeowners are concerned that missed payments, defaults or a low credit score could prevent them from securing the cover needed to insure their property.
However, it is still possible to arrange home insurance with bad credit, so there is no need to worry. This guide explains how insurers assess your credit history, where to look for bad credit home insurance, which types of adverse credit may create the greatest difficulties, and how to find the cheapest policy for your circumstances.
Is there home insurance for people with bad credit?
Yes, having a poor credit history doesn’t automatically disqualify you from getting home insurance. It’s quite common for people with varying degrees of bad credit to get buildings or contents insurance, since adverse credit doesn’t necessarily stop you from getting a mortgage.
However, unlike applying for a mortgage or a large personal loan, where the lender is taking on significant financial risk by giving you cash, an insurance company is simply agreeing to cover your property and contents against damage.
Because the dynamic is different, insurers are generally much more lenient regarding your credit history. The primary issue you will face is not usually getting the cover, but rather how you are allowed to pay for it.
How adverse credit impacts your applications
When you apply for home insurance cover, providers will usually carry out a credit check. This helps them assess the likelihood of you missing premium payments, particularly when you choose to pay by monthly instalments.
Having bad credit does not always prevent you from obtaining home insurance. However, different forms of adverse credit may affect your application and policy terms in different ways.
Missed or late payments: Minor issues such as occasional missed or late payments may lead to higher interest charges when paying monthly. Alternatively, the insurer may require you to pay the full annual premium upfront.
CCJs and defaults: A record of defaults or County Court Judgments (CCJs) can suggest a more serious history of unpaid debt. Some mainstream insurers may refuse to offer monthly payments, although many will still provide cover when the annual premium is paid in one lump sum.
IVAs and DMPs: An Individual Voluntary Arrangement (IVA) or Debt Management Plan (DMP) shows that you are formally dealing with significant debt. As these arrangements can limit your disposable income, most standard providers are likely to decline an application for a monthly credit agreement.
Bankruptcy: Bankruptcy is generally viewed as the most serious type of adverse credit. If you are currently an undischarged bankrupt, many insurers may reject your application, meaning you may need to approach a specialist non-standard insurance provider. Once the bankruptcy has been discharged and no longer appears on your credit record, obtaining standard home insurance may become easier.
How to get home insurance with bad credit
Paying your home insurance premium annually in one lump sum is often the most effective way to obtain cover when you have bad credit.
By paying the full premium upfront, you avoid the need for a monthly finance agreement. As the insurer is not providing credit, there is no risk of you defaulting on monthly payments. Some providers may also avoid carrying out a hard credit check, which can make your credit history less relevant to the application.
When paying the annual premium upfront is not affordable, monthly instalments may still be available. In this situation, it can be helpful to use an independent insurance broker with experience in adverse credit cases. A broker can identify providers that may be more willing to offer suitable cover and monthly payment options.
What to do if your application is declined
Being declined for home insurance can be frustrating, but it does not mean you have run out of options. After an insurer rejects your application, there are several practical steps you can take.
Check your credit report: Request a free copy of your credit file from Experian, Equifax or TransUnion. Review it carefully for mistakes, outdated information or signs of fraudulent activity that may be affecting your credit history. Any incorrect details should be challenged and corrected.
Avoid applying again straight away: Do not immediately submit several new home insurance applications through different comparison sites. A number of hard credit searches within a short period may make it more difficult to secure a policy.
Speak to a specialist: Contact an insurance broker with experience in helping applicants who have bad credit. Specialist brokers may have access to more flexible insurers and underwriters who assess applications manually rather than relying only on automated credit-scoring systems.
Home insurance providers for bad credit
Comparing home insurance quotes can be more complicated when you have bad credit. Most standard price comparison websites are designed for straightforward applications that present a lower level of risk.
The following specialist home insurance providers may consider applications from people with adverse credit:
Homeprotect: Homeprotect does not automatically reject applicants because of bad credit. You are not normally required to disclose CCJs or IVAs, although you must declare whether you have been bankrupt within the past five years. Its policies are underwritten by AXA, providing the reassurance of an established insurer.
Everywhen, formerly Towergate: Everywhen has a specialist home insurance team that assesses applications manually. It may consider applicants with CCJs or poor credit on a case-by-case basis. Cover may also be available following a previous bankruptcy, depending on factors such as the amount involved, when it occurred and the surrounding circumstances.
Intelligent Insurance: Intelligent Insurance provides home insurance for applicants with low credit scores or CCJs. As it specialises in arranging cover for people with bad credit, it aims to offer competitive policies even where an application has previously been declined by another insurer.
Tips for getting cheap home insurance with bad credit
Finding home insurance with bad credit is important, but the policy must also remain affordable.
The following steps may help reduce the cost of your home insurance:
Pay annually: Paying the full premium upfront avoids interest and other charges linked to monthly finance. The ABI states that the average combined buildings and contents insurance policy costs £375, although the total amount may be higher when payments are spread across monthly instalments.
Increase your voluntary excess: Choosing a higher voluntary excess means you agree to contribute more towards the cost of a claim. This reduces the insurer’s potential financial liability and may result in a lower premium.
Improve your home security: Installing recognised security measures, such as approved burglar alarms, five-lever mortice deadlocks and outdoor security lighting, may help you qualify for discounts from some insurers.
Only purchase the cover you need: Avoid adding optional features, such as accidental damage or away-from-home cover, unless they are relevant to your circumstances. Our home insurance calculator can help you estimate the appropriate level of cover for your property and belongings.
What if you have a low credit score?
A low credit score is simply a figure calculated by a credit reference agency. When applying for bad credit home owners insurance, providers will usually be more concerned with the circumstances behind the score than the number itself.
A limited credit history or a single missed payment from several years ago is unlikely to prevent you from obtaining home insurance. Applications are more commonly declined where there are serious, unresolved debts or an ongoing pattern of financial difficulty.
Frequently Asked Questions
The most effective way to find affordable home insurance with bad credit is to use an independent broker who specialises in helping applicants with adverse credit.
Specialist brokers have established relationships with insurers and underwriters who may assess applications individually rather than relying solely on automated credit checks. Paying your premium annually instead of by monthly instalments can also reduce the overall cost by avoiding interest and finance charges.