The brain trust at the insurance companies (known as actuaries), love their numbers. They sniff out a trend, sometimes even before it happens, and slap a charge on it faster than my cat can catch a mouse — and, let me tell, you she’s fast!
The fact that a strong correlation exists between bad credit and reported claims has not escaped the attention of these people. The upshot: Bad credit will cost you a bundle in insurance-premium increases and may result in your insurance being denied.
Some states have gotten very excited about safe drivers and homeowners getting premium increases with no claims being reported. They’ve outlawed or restricted the use of credit reports and scores in setting insurance prices.
The states are still battling with this issue and it is difficult to say whether current laws will be overturned, upheld or more will be added. Currently a majority of states have something on the books about using credit report information in determining access to insurance, insurance rates or underwriting. Fair Isaac has developed an Insurance Score. The score is calculated by taking information from your credit report, but the formula is different from the one used to figure your credit score. Insurance scores range from 500 to 997 with 626 to 775 being average. To find out if scores are used in your state, contact your local state insurance department.
More financial stress may be distracting and may result in more accidents. Is it a sign that if you’re fastidious about your credit you’ll be the same about car and home maintenance? There are a number of studies underway, including one at the Fair Trade Commission, trying to determine if this practice is kosher. Time will tell. But in the meantime, bad credit can cost you when it comes to insurance premiums.
No related posts.
No related posts.