How Do Car Recalls Impact Car Insurance?

Last Updated on March 14, 2020

So your vehicle has been recalled. How does this affect your car insurance? Will you pay more or less for car insurance after an auto recall?

Every year, more than 200 vehicles are recalled across the United States. Some of these recalls are minor issues – like cosmetic problems with the interior. Other recalls are serious issues – like life-threatening manufacturer’s defects with the airbags or brakes.

Today, we’re answering all your questions about how car recalls impact car insurance.

How Does a Recall Work?

First, let’s give a basic overview of how car recalls work. In the United States, the National Highway Traffic Safety Administration (NHTSA) is responsible for controlling car recalls across the country. In partnership with auto manufacturers, the NHTSA will announce a recall to the public. In some cases, the NHTSA may also demand a recall if recalls and car insurance

When your car is recalled, you’ll typically be asked to take it to the nearest dealership for a free repair or replacement. In some cases, the recall will take several weeks to repair – say, if a popular consumer vehicle gets recalled. In that case, the dealership might give you a rental vehicle during the interim period.

So your vehicle has been recalled. What’s next? How does car insurance work?

Does a Car Recall Affect Car Insurance Prices? Probably Not

It’s certainly possible for a car recall to affect car insurance prices. However, in most situations, recalls have little to no impact on car insurance rates.

In other words, you can expect to pay the same prices on car insurance premiums before your recall as you do after your recall.

However, a car recall can raise insurance premiums in the long run. A recall, for example, can impact the safety rating of your vehicle. It could also raise or lower the value of your vehicle. Insurance companies judge a vehicle’s safety rating when creating your rates. Typically, you’ll pay lower insurance prices on a vehicle with a five-star crash safety rating than on a vehicle with a four-star crash safety rating – although this isn’t always the case.

Remember: the car insurance company is not responsible for repairing your vehicle after a recall. In fact, your car insurance company has nothing to do with the repair or replacement process. It’s not like a traditional insurance claim where your insurance company has to pay out.

A Recall Could Raise Prices if the Issue Isn’t Corrected

Some recalls will highlight a problem with a vehicle that cannot be corrected. In this situation, the recall could raise prices on your vehicle in the long run. A safety issue on your vehicle, for example, might make your vehicle less safe to drive and more likely to be involved in a claim. In that situation, your car insurance company will see you as a higher risk and may raise insurance prices.

A Recall Could Lower Prices if the Issue is Repaired

Some vehicles have a fixable issue. When this issue is fixed, the vehicle is safer. Theoretically, this should lower your insurance prices.

However, this isn’t always the case. Safety ratings are just one of many factors car insurance companies use to calculate ratings. Even if your recall fixes a serious safety issue, it’s unlikely your insurance company will give you a steep discount on your car insurance.

What to Do If Your Vehicle is Recalled

If your vehicle is recalled, then it’s important for you to pay attention to the rules of the recall. Recalls are serious situations designed to protect the safety of American drivers and consumers. If a vehicle has been recalled, it’s because regulatory agencies have determined the vehicle – or some safety feature on the vehicle – is a serious safety threat that needs to be fixed.

After a recall is announced, the NHTSA will typically direct drivers to visit the nearest dealership to have their vehicle repaired or replaced. The car manufacturer may also set up a hotline or a website where vehicle owners can get more information about their recall.


A recall is unlikely to have a major impact on the price of your car insurance. Yes, recalls can identify safety defects in vehicles – but it’s unlikely these defects will have a major impact on car insurance prices. Remember: vehicle safety is just one of many different factors car insurance companies use to calculate insurance rates.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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