How an Auto Recall Affects Your Car Insurance

As long as you get your car repaired after a recall, an insurance company shouldn’t hike up your rates.

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Neda Jafarzadeh
We all like to think that the car we drive around is safe and reliable. But unfortunately, we sometimes end up with a vehicle that has a malfunctioning part.

In 2012, manufacturers filed more than 650 safety recalls, affecting more than 17.8 million vehicles, according to the National Highway Traffic Safety Administration.

Generally, you can take care of the issue by scheduling an appointment at your dealership and taking your car in for repair. While you can get the car defect fixed, the auto recall might affect your car insurance rates. Below are some things to keep in mind about auto recalls and how they can impact your insurance rates.

1. A recall shouldn't affect your car insurance.

If you are dealing with an auto recall, it shouldn't affect your insurance rates. This is because in the case of a recall, your insurance company isn't legally responsible to pay for the repairs. This obligation falls to the vehicle manufacturer. Once the part is repaired, your car should be back in shape, and there shouldn't be reason for your car insurance company to hike your rates due to safety concerns.

To be on the safe side though, you may want to provide your car insurer with paperwork documenting that the necessary vehicle repairs have been made. If you get into an accident because of a faulty part that has been recalled, your insurance company can settle the cost with the manufacturer.

However, if the recalled part affects the safety of your car because the issue can't be corrected, that may have a negative impact on your car insurance rates. On the other hand, if the value of your car is affected because of a recall, it's possible your insurance rates might actually decrease.

2. If you ignore a recall notice, your rate might go up.

Once you receive a notice from your vehicle manufacturer that a part of your vehicle has been recalled – even if the recall is minor – it's important that you make an appointment with your local dealer to have the part fixed immediately. If you neglect to repair a recalled part and get into an accident as a result, the car's safety rating will be affected, which could increase your insurance rates.

3. Reconsider cars with a history of repeated recalls.

In theory, an auto recall should have little-to-no impact on your current auto insurance rates. However, the situation changes when you're shopping for a new vehicle. When you're looking for your next car it might be wise to look into the recall history on vehicles you're interested in, and avoid those that have had a number of recalls in the past.

Note that if you buy the car from an individual, you're still entitled to a repair from the manufacturer. And if you buy a used car, you can sign up for recall notices on the car manufacturer's website using the car's vehicle identification number. Also, if you looked up the car and saw that there were recalls on it in the past, ask the seller for proof that the repairs were made.

The bottom line: If you get a recall notice about your car, don't panic. It's likely your insurance rates won't be significantly impacted. However, it's important to get the vehicle fixed right away, otherwise that could have an effect on your insurance rates.

Neda Jafarzadeh is analyst writer for NerdWallet, a site dedicated to helping consumers make better financial decisions like finding the best car insurance for their needs.