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.

Once you have found the home that you would like to buy and have begun the process of closing on the house, you will need to begin searching for a Homeowners insurance policy that meets your needs and your budget.

Depending on the part of the country you plan to live in, the size of the home being purchased, and the amount of theft prone possessions inside, insurance price quotes can vary greatly. But most price quotes from a private insurance company will fall between $300 and $1500 a year.

Hopefully you are working with a helpful realtor who has already informed you of the importance of shopping around for Homeowners insurance price quotes before deciding on a coverage plan that is right for you.

If a realtor has not told you already, it is best to call at least three different insurance companies to get price quotes for your home. You may already have an insurance company in mind, possibly one that handles your parents’ insurance needs or one that already handles your car or life insurance.

If you don’t already have an insurance company then don’t be afraid to simply search online or through the telephone book for insurance companies. You may also recognize names from advertisements. Feel free to use these names as a starting point for a price quote.

Whichever insurance companies you decide to begin your search with, make sure you get at least three different price quotes from three different agencies before settling on the best quote for your home.

Before you begin calling the insurance agencies regarding a price quote, it is best to have hard knowledge about the home you are purchasing. This includes the current appraisal value of the home or an estimate from before the house was put up for sale.

You will also want to have a list of the dimensions of the home and the amenities inside the home, such as the square footage of each room and any special flooring, countertops or architectural design that adds to the value of the home.

As well, before you get started have a list of belongings that will add value to the home, such as appliances, furniture, jewelry and any major artwork or collectors items. Having all of this information ready can speed up the rate quote process.

With the advent of technology and computers, many major home insurance companies have begun placing information for quick 10-15 minute rate quotes online. This frees you up from having to speak to a representative on the phone, who may be trying to talk you into insurance that you don’t need.

Many of these websites also provide information explaining different types of insurance, so you can feel free to sit and read over the information without feeling as though you are asking too many questions.

Some of the major insurance companies that have information available online, as well as quick rate quotes for Homeowners insurance include Allstate, State Farm, Liberty Mutual, and Travelers insurance companies. Of course there are several other insurance companies available online, so take time to research these companies if you have access to a computer and the Internet.

If you have tried several insurance companies and still aren’t happy with the price quotes being offered, try switching up the details of the plan. Before locking yourself into an insurance rate you are unhappy with, ask about changing the deductible, the coverage costs or even the personal liability insurance.

It really is a personal preference as to how much insurance is enough insurance for your family, so keep in mind that if you feel like you can’t afford the price quotes being offered, there are ways to make payments more manageable.

One of the best ways to manage the yearly payment of Homeowners insurance is simply to increase the deductible, or the amount the homeowner will pay before the insurance company steps in and begins paying for damages or loss. Most insurance companies will require a minimum deductible of either $250 or $500 but the homeowner can easily change that deductible to $750 or $1000 to reduce the annual payment.

If this still doesn’t work in giving you a fair price quote, speak to the insurance agent and ask for options regarding reducing the rate. If you give them a ballpark figure of how much insurance you can afford a year, most often they will work to help you attain these figures.

You may even want to consider adding security or fire safety features to the home, if that insurance company offers a discount for these features. Although it may cost a bit of money out of your pocket to add these features, it will save your insurance premium in the long run.