How does Credit Affect Your Insurance Rates?
Your credit score is run any time you shop for a home or auto loan, rent a home or apt. And your credit is run when you shop for Insurance. Keep in mind, your "Insurance score" is different than your "Credit score". Your credit score will be based on your credit history and a few other factors, like your income. Insurance carriers will take your credit information and put it into a model with many other factors, like payment history, bankruptcies, collections and the amount of credit you have incurred. For example if you have never been late on your mortgage payment, you have a better insurance score than someone who pays late. If you have "maxed out" your credit cards, you will have a lower insurance score than someone who pays them off each month.
Your credit score can tell someone how responsible you are. Studies at both the federal and state level, have show your credit score correlates with the probability of an Insurance loss. The higher the Insurance score, the lower the risk, so the lower the rates. Now, other factors are included in Insurance rates- where you live, are you married, your age, male or female. Insurance carriers have several rating "Tiers" customers are placed into based on the details of their lives. Then you factor in claims history. Then the type of car or the construction of the home. So many things affect your rates, but it does start with your Insurance score.
Insurance scores do NOT consider the following in their assessment:
*Income *Disability
*Ethnic Group *Nationality
*Religion
Insurance carriers will use at least one of three credit bureaus to request your credit history:
*Experian
*TransUnion
*Equifax
You are entitled to one free credit report a year. Contact one of the above bureaus to get your report. You have the right to dispute any discrepancies. The bureau is required by law to correct any errors. If you are ever denied Insurance coverage, based on your credit information, you are entitled to a free report from the bureau that provided the information to the carrier.
Bottom line, Yes- your credit can affect your insurance premiums. Just one more reason to pay bills on time and keep credit card balances low. You can fix your credit or you can build a good credit history from scratch.
Your credit is important. Know what your score is and keep it high!
Protecting Grandma's China (and other knick knacks!)
It isn't as popular to pick out china patterns as it was when my parents were married. But many of us have inherited china, crystal and silver from our mothers and grandmothers. Is it covered in the case of a loss? That depends. If you have antique patterns, worth more than the everyday patterns of today, your policy may not cover the replacement. (Not that you can truly replace these family heirlooms.)
Most homeowner's policies will have an optional coverage called Scheduled Personal Property. If you have a single item/collection worth more than your coverage allows, you want to shedule the property out. For example- many policies will cover up to $2500 for a single piece of jewelry, or camera equipment. If you have an item/collection worth more than what is covered, you will be out of luck in the case of a loss. The policy will not pay more than the coverage calls for, regardless of the proof you may show. Ask your agent what your limits are.
Scheduled Personal Property will offer additional types of coverage your basic Personal Property coverage might not. There is no deductible, and most will cover theft or loss of any kind. There are exclusions such as wear and tear and war.
Other items to consider scheduling out would include:
* Engagement and wedding rings (any jewelry if a single piece is above the included limit)
* Coin collection
* Gun collection
* Electronics
* Camera equipment
* Furs (as politically incorrect as these are nowadays, there is still coverage)
To put a Scheduled Personal Property endorsement in place, you will need a certified appraisal, dated within the last 3 years. Pictures are a good idea as well. This coverage is in place to make sure you are compensated for the Replacement Cost in the case of a loss. I know many things can't be "replaced" if lost or stolen, but many things can be.
This is what insurance is for. Use it!
Contact your Insurance agent to find out about this valuable coverage.
Thanks for reading!
