Home insurance score drastically decreases after car insurance claim?
Credit risk and insurance risk are highly correlated for a single legal party.  Trouble with one could indicate trouble with another. Any increase in credit risk such as new borrowing will be perceived to be an increased likelihood of insurance risk, manifested as a fraudulent or subconsciously induced claim.  Any claim of insurance will be perceived to be an increased likelihood of default, manifested as a default, voluntary or not. To a creditor/insurer, only the law applies; therefore, private arrangements between the borrower/insured and third parties do not factor because the creditor/insurer has no hope of recourse against such third parties in most places around the world. Regardless of whether there is a price ceiling on compensation for damages to assets, limiting an insurers costs, if a risk is realized then it can be presumed through sequential sampling as well as other reliable statistical techniques that future risk has risen.  The aforementioned risk dominoes subsequently fall. Generally speaking, the lower one's financial variance, the lower the financial costs.  In other words, uncertainty can be mostly quantified with variance and other mathematical moments as well.  Any uncertainty is a cost to a producer thus a cost to the consumer.  A consumer who is perfectly predictable with good outcomes will pay much lower costs on average than not, so one who keeps a tight financial ship, not exposing oneself to financial risks and better yet not realizing financial risks, will see less financial variance, thus will enjoy lower costs to financing, which includes insuring.
"Some of this may depend on how your employer chose to deal with your notice period.  Most employers employ you for the duration (which means you'd be covered for March on your insurance).  They could 'send you home' but pay you (in which case you're an employee for the duration still); or they could terminate you on your notice day, and give you effectively a severance equal to two weeks' pay.  That is what it sounds like they did. They should have made this clear to you when you left (on 2/23).  Assuming you work in an at-will state, there's nothing wrong (legally) with them doing it this way, although it is not something I believe is right morally.  Basically, they're trying to avoid some costs for your last two weeks (if they employ you through 3/6, they pay for another month of insurance, and some other things).  In exchange, you lose some insurance benefits and FSA benefits. Your FSA terminates the day you terminate employment (see this pdf for a good explanation of these issues).  This means that the FSA administrator is correct to reject expenses incurred after 2/23.  The FSA is in no way tied to your insurance plan; you can have one or the other or both.  You still can submit claims for expenses prior to 2/23 during your runout period, which is often 60 or 90 days. In the future, you will want to think ahead when leaving employment, and you may want to time when you give notice carefully to maximize your benefits in the event something like this happens again.  It's a shady business practice in my mind (to terminate you when you give notice), but it's not unknown. As far as the HSA/FSA, you aren't eligible to contribute to an HSA in a year you're also in an FSA, except that they use ""plan year"" in the language (so if your benefits period is 6/1/yy - 5/31/yy, that's the relevant 'year').  I'd be cautious about opening a HSA without advice from a tax professional, or at least a more knowledgeable person here." First you should understand the basics of how insurance companies make money: In a simple scenario, assume 1,000 have car insurance. Assume that on average, 100 people have accidents per year, and that each accident costs $10,000. So, we can expect total costs to be $1,000,000 per year. Some of those costs will be paid by the drivers, who have some sort of 'deductible'. That is - the insurance company will only cover costs after the driver has themself paid some initial amount [something like, the first $1,000 of repairs is paid by the driver]. So now the insurance company expects to have to pay out $900,000 in total claims this year. If they want to pay those claims (and also pay their administrative costs, and earn a profit), they might want to have $1,250,000 in revenue. Across 1,000 people, that would be $1,250 / year in insurance premiums. Of course, the big question for the insurance company is: how much will they really need to pay out in insurance claims each year? The better they can predict that number, the more profitable they can be [because they can charge a much more accurate amount, which can earn them new customers and gives them insurance {pun} that each new customer is actually profitable to them on average]. So the insurance company spends a lot of time and money trying to predict your likelihood of a car accident. They use a lot of metrics to do this. Some might be statistical hogwash that they charge you because they feel they can [if every insurance company charges you extra for driving a 2-door instead of a 4-door, then they all will], and some might be based in reality. So they attempt to correlate all of the items in your list, to see if any of those items indicates that you should be charged more (or less) for your insurance. This is equal parts art and science, and a lot of it comes down to how they market themselves. ie: if an insurance company gives a discount for being in college, is that because college drivers are better drivers, or is it because they want to increase the number of young customers they have, so they can keep those customers for life? Therefore how each metric factors into your calculation will be based on the company using it. It would basically be impossible to 'come up with' the same answer as the insurance company by having the information you provided, because of how heavily dependant that answer is on statistics + marketing. As for how your state matters - some states may have different accident rates, and different payout systems. For example - is Hawaii driving more dangerous because of all the tourists driving rented cars faster than they should? Is New York less expensive to insure because better public health care means less cost is borne by the insurance company in the event of an accident [I have no idea if either of these things are the case, they are purely for hypothetical discussion purposes].  In short, make sure you get quotes from multiple providers, and understand that it isn't just the cost that changes. Check changes in coverage and deductibles as well [ie: if one company charges you $100 / month when everyone else charges $200 / month - make sure that the cheaper company doesn't limit its coverage in ways that matter to you]. Some proportion of the costs of a policy have little to no relationship to miles driven.  Think of costs of underwriting, and more especially sales/marketing/client acquisition costs (auto insurance isn't in the same league as non-term life insurance (where the commissions and other selling expenses typically exceed the first year's worth of premiums), but the funny TV ads and/or agent commissions aren't free), as well as general business overhead. Also, as noted by quid, some proportion of claim risk isn't correlated to distance covered (think theft, flood, fire, etc.). There are also differences in the miles that are likely to be driven by a non-commercial/vehicle-for-hire driver who puts 25k miles a year vs. one who puts 7k per year.  The former is generally going to be doing more driving at higher speeds on less-congested freeways while the latter will be doing more of their driving on crowded urban roads.  The former pattern generally has a lower expected value of claims both due to having fewer cars per road-mile, fewer intersections and driveways, and also having any given collision be more likely to result in a fatality (paralysis or other lifetime disability claims are generally going to exceed what the insurer would pay out on a fatality). Most people buy insurance because it is legally required to own a car or to have a mortgage. People want to own homes and to have personal transportation enough that they are willing to pay for required insurance costs. There are a lot of great explanations here as to why insurance is important and I don't want to detract from those at all. However, if we're being honest, most people are not sophisticated enough to measure and hedge their various financial risks. They just want to own an home and to drive a car. "is your credit history ruined, or merely dinged? Is the blow   recoverable? Any bad credit rating event is recoverable given enough time / money to solve the problem.  As far as ""Ruined"" vs"" ""Dinged"", well, that's a matter of opinion; some people think that one bad item is the end of the world, others not so much.  You will have an unpaid debt listed on your report.  This will drop your score.  The amount it impacts the score will depend on other factors in your report. Can the carrier try to get the money back in court? I assume you'll   wind up dealing with a debt collector.  Yes they could go to court, but that's unlikely at least in the short term.  Far more likely is that the debt ends up sold to a debt collection agency for pennies on the dollar.  The debt collection agency will harass you until you pay and they might file in court if they think the debt is more than enough to cover the court costs. Will this affect any other relationships you have? Possibly.  A bad rating may make it more difficult to get credit in the future.  However that depends on numerous other factors such as your entire history.  It could even prevent you from being hired from certain jobs - not many of them, but some.   Is it criminal? Read this: http://www.startribune.com/investigators/95692619.html  The US does NOT have a debtors prison.  However if the company decides to file a court case and you fail to appear or fail to abide by the court ruling then, in some states, you could be committing a crime and may be thrown in jail.  At which point you are on the hook not just for the original fee but potentially a plethora of other costs.  Never mind the loss of reputation when your friends, family and coworkers find out that you are sitting in jail. At the end of the day, just pay the debt.  If you agreed to the plan and the plan has an early cancellation fee then the moral and ethical thing to do is pay it.  Trying to see how bad it would be to ignore it isn't the right way to live." First, don't owe (much) money on a car that's out of warranty.  If you have an engine blow up and repairs will cost the lion's share of the car's bluebook value, the entire car loan immediately comes due because the collateral is now worthless.  This puts you in a very miserable situation because you must pay off the car suddenly while also securing other transportation!  Second, watch for possible early-payment penalties.  They are srill lokely cheaper than paying interest, but run the numbers.  Their purpose is to repay the lender the amount of money they already paid out to the dealer in sales commission or kickback for referring the loan.  The positive effects you want for your credit report only require an open loan; owing more money doesn't help, it hurts.  However, interest is proportional to principal owed, so a $10,000 car loan is 10 times the interest cost of a $1000 car loan.  That means paying most of it off early can fulfill your purpose. As the car is nearer payoff, you can reduce costs further (assuming you cna handle the hit) by increasing the deductible on collision and comprehensive (fire and theft) auto insurance.  It's not just you paying more co-pay, it also means the insurance company doesn't have to deal with smaller claims at all, e.g. Nodody with a $1000 deductivle files a claim on an $800 repair.  If the amount you owe is small compared to its bluebook value, and within $1000-2000 of paid off, the lender may be OK with you dropping collision and comprehensive coverage altogether (assuming you are).  All of this adds up to paying most of it off, but not all, may be the way to go. You could also talk to your lender about paying say, 3/4 of it off, and refinancing the rest as a 12-month deal. "I always hesitate to provide an answer to ""how does this affect my credit score?"" questions, because the credit agencies do not publish their formulas and the formulas do change over time. And many others have done more reverse engineering than I to figure out what factors do affect the scores. To some extent, there is no way to know other than to get your credit score and track it over time. (The credit report will tell you what the largest negative factors are.) However, let me make my prediction. You have credit, you aren't using a large percentage of it, and don't have defaults/late payments. So, yes, I think it would help your credit score and would build a history of credit. Since this is so unusual, this is just an educated guess." There is plenty of over-rationalisation in the majority of these answers, when the simple answer is that it is simply down to statistics. Say an insurer had two pieces of information about two separate drivers: annual mileage, and whether they had had an accident in the last 3 years. Driver A drives 10,000 miles a year and hasn't had an accident in the past 3 years. Driver B drives 500 miles a year and hasn't had an accident in the past 3 years. Which would the insurer think was the safer bet? The answer is A, and this makes his premiums lower. The reason for this is that the insurer has a lot more data about Driver A than Driver B: they know that Driver A has driven 30,000 miles without having an accident. This could, of course, be luck, or a fluke, but it is likely that Driver A is actually a safe driver. The chance that Driver A hasn't had an accident just through sheer luck and that they are actually a terrible driver is quite slim. On the other hand, Driver B has only driven 1,500 miles in the past three years. Whilst this seems like prima facie evidence of them being as safe a driver as Driver A, it is much more likely that Driver B could have driven 1,500 miles and avoided an accident through sheer luck, even though they are a terrible driver.  This means drivers who drive low amounts of mileage will be penalised relative to other drivers who have high mileage. It has nothing to do with insurers taking a judgement that 'doing more mileage makes you more experienced' or 'makes you a better driver' as others have suggested here (although, it is probably true - it's not quantifiable from an insurer's perspective).