Recieved a letter yesterday from my insurance company. They are now going to base home insurance rates based on your credit score....WHAT?
2007-07-30 13:04:47 · 0 answers · asked by cobblejoe 2 in Business & Finance ➔ Insurance
What every one said before me is partially correct.
We dont actually use your credit score. We use an "Insurance Score" which is based on the information in your credit file. The difference? We dont take all the same things into account, and different things are weighted differently.
Study after study after study has proven that people with lower insurance score are more prone to loss. Some argue that it's becuase they dont have access to the cash to just take care of it themselves, and some argue that it is becuase people with low scores, are less disciplined, and less responsible and therefore dont take as many precautions as people with higher scores.
While this actually hurts me due to unestablished credit.... i agree with it. You have to remember.... it's busiiness not personal. And by charging people more who are more likely to have claims, we can keep rates down for the people who dont have claims. Also, that is one factor out of MANY!
2007-07-31 03:15:39 · answer #1 · answered by Insurance MAN 2 · 0⤊ 1⤋
It has been proven that people with lower credit scores have a higher rate of claims. Most insurance companies now base part of the premium for both auto and homes on the scores. As far as I know there haven't been any studies as to why because the insurance companies don't care why. Many people have tried to dis-prove the findings (the University of Texas had a big study several years ago) but nobody has been able to.
2007-07-30 13:24:25 · answer #2 · answered by Zarnev 7 · 0⤊ 0⤋
That's been around for several years now. The rationale is that those with lower credit scores are more prone to file small nuisance claims every time they have any sort of issue, rather than simply pay it on their own.
It's gotten to the point that, when I write a residential offer to purchase, I make it contingent upon the buyer being able to obtain insurance for the property at a certain price or less.
2007-07-30 13:15:27 · answer #3 · answered by acermill 7 · 0⤊ 0⤋
What state are you in? I thought all states were ALREADY doing that, except California. If you're in CA, well, welcome to the rest of the nation, LOL.
The bottom line is, there's a direct corrolation between low credit scores and high claim payouts. No one has done a study about why, so dont' believe it if someone says WHY low credit score people have more/higher claims - just like no one knows WHY 16 year old boys have more car accidents. Who cares? The direct relationship exists.
So there ya have it!
2007-07-31 08:14:04 · answer #4 · answered by Anonymous 7 · 0⤊ 0⤋
The only way to find the best rate is to get multiple quotes from different companies. If you don't want to put in 30 minutes of effort then it can't be that important. Every company is different and rates vary widely.
2016-05-18 01:28:06 · answer #5 · answered by ? 3 · 0⤊ 0⤋
Been around for years (and car insurance as well) if you can't pay its a higher risk and thus your premiums will be higher.
2007-07-30 13:30:45 · answer #6 · answered by Anonymous · 0⤊ 0⤋
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2007-07-31 03:08:25 · answer #7 · answered by saara m 1 · 0⤊ 1⤋