Insurance World

It is widely known that insurance companies use factors such as your age, sex, and marital status to determine how much you are going to pay for your homeowner’s and auto insurance. What you may not know is that your insurance company is most likely using information found in your credit report as well. In fact, the single biggest factor in your premium is usually what the insurance industry refers to as your insurance score, and that insurance score is calculated from information found in your credit report. Your insurance score is not tied to your credit score. You can’t always be sure that your insurance score is good just because you have a good credit score or because you’ve not had any obvious negative information on your credit report such as a late payment.

Even though more than 90% of insurance companies use an insurance score in some way, most people are completely unaware that it’s affecting them. The reason that most people aren’t aware of this is because the insurance companies have not made this public information. The practice is as controversial as it is effective. Insurance companies have made millions of extra dollars by using this method of rate development but much of that would be lost if they were completely honest about this practice. They would have to hire extra employees to take phone calls from upset customers. They would also lose customers to the few companies that don’t yet use credit information in their rating practices.

State governments are now passing legislation that requires insurance companies to notify their customers if credit information was used to generate their rates and if the best possible rate wasn’t achieved as a result. Many insurance companies chose to ignore this legislation due to the increased cost of notifying their customers and the potential that notifying them may make them angry enough to look elsewhere for insurance. Allstate and Progressive insurance companies were recently involved in multi-million dollar class action lawsuits for failing to notify customers as they are now required to do.

Since it is likely that your rates are being calculated by using an insurance score, there are a few steps that you should take to make certain that your score is as high as it can possibly be. First, check your renewal paperwork that your insurance carrier sends you. There should be a statement enclosed informing you of how your insurance score is affecting your rates. However, if there is no disclosure enclosed that does not mean that an insurance score is not being used. Second, you should pull copies of your credit reports annually to make certain that there is no erroneous information in them. An error can cost you hundreds of dollars. Third, you should make sure that you pay your bills on time, close any unused accounts, and don’t open accounts that you don’t need.

Insurance scores are much more complex than credit scores. Simply paying your bills on time just isn’t enough. Insurance scores use information such as what types of accounts you have, how long you have had them, and how many total accounts you have. Companies such as InsuranceScore.net specialize in helping people improve their insurance scores. For a one-time fee they will analyze your credit reports, tell you exactly what you can do to improve your score, tell you how to make sure that your score stays high, and how you can use your improved score to save hundreds of dollars on each of your insurance renewals.

Being well informed and taking some preventative actions is often the difference between paying a high rate and saving lots of money on your homeowner’s and auto insurance. With many insurance companies customers with high insurance scores pay up to 54% less for their insurance than a customer with a below-average score.

Most people buy an insurance product - whether it is a homeowners insurance or another - without reflecting much over what they actually are buying. One thing is the premium or the price you pay for it. This is the single issue or part of the insurance purchase that seem to concern most people. When it comes to other elements of the insurance product they buy, their concerns are almost absent. Most people seem to take for granted that what the insurance you buy is the same, no matter which insurance company you buy it from. This attitude is based on a fundamental misunderstanding of what an insurance product is and how the insurance industry is functioning.

Of course it is important not to pay more for an insurance product than necessary as it is for any product. But sometimes we are unaware of what coverages we have with our homeowners insurance until we file a claim and find out too late that we weren’t covered for a particular loss. Owners of motorcycles, boats and motorhomes may be surprised to learn that neither their homeowners insurance nor their auto insurance covers them for any loss associated with these items.

Non-traditional (or inland marine as some policies are called) insurance is a custom sector of insurance dealing with properties and items that would not traditionally fall under a typical property or automobile insurance. Such items include boats, snowmobiles, ATV’s and person watercraft. You may find that your current insurance company does not even write policies for these types of goods, in which case you will need to check out a specialty insurance company.

Foremost Insurance of Caledonia, Michigan is just such an insurer. Insuring everything from motor homes to motorcycles Foremost offers a wide variety of policies that protect non-traditional goods that homeowners policies simply don’t cover. With agents across the United States, Foremost is a leader in issuing policies that cover losses against such goods. Foremost is part of Farmers Insurance Group, a trusted name in both homeowners and auto insurance throughout the U.S.

Accidents happen no matter if we are in our home, car or riding our ATV. By making sure you are covered you can prevent a small accident from becoming a financial nightmare by making sure you have the correct insurance coverage no matter what you might own.