Not long ago my car insurance agent called to let me know that I may be eligible for a discount on my insurance rates due to my “excellent credit”. This was a little surprising to me since it had never occurred to me that my auto and homeowners insurance premiums were based, at least in part, on my credit rating.
Apparently, however, this is a thing.
One landmark study found that credit-based insurance scores
are used by about 95 percent of all auto and home insurers in calculating the
cost of insurance to individuals.¹
While the vast majority of insurance companies use
credit-based insurance scores to help determine the price of insurance, it is
banned in the states of Massachusetts, Hawaii, and California. Some states only
allow it as a factor for property insurance like auto and homeowners insurance.
Other states allow it to be used with any type of insurance.
Generally, an insurance company will use a credit-based
insurance score as just one factor in its underwriting process. Other factors
may be considered, depending upon the type of insurance. For example, with auto
insurance, other factors could include your zip code, the age of the drivers,
the make, model and age of the car, and the number of miles you drive annually.
The use of credit scores to determine insurance rates is
rooted in research that has shown individuals with lower credit scores had
higher car insurance losses and higher claims payouts.
You can ask your insurance company if a credit-based
insurance score was used to underwrite and rate your policy, and in which risk
category you were placed.
If you want to improve your credit-based insurance score,
you should consider taking the same steps you would to improve your credit
rating: make timely debt payments, clear up past disputes and keep credit card
Predictive Analytics: Achieving Greater Decision Accuracy, Better Risk Segmentation, and Greater Profitability, Fair Isaac Corporation, 2012 (most recent statistics available).
The content is
developed from sources believed to be providing accurate information. The
information in this material is not intended as tax or legal advice. It may not
be used for the purpose of avoiding any federal tax penalties. Please consult
legal or tax professionals for specific information regarding your individual
situation. This material was developed and produced by FMG Suite to provide
information on a topic that may be of interest. FMG, LLC, is not affiliated
with the named broker-dealer, state- or SEC-registered investment advisory
firm. The opinions expressed and material provided are for general information,
and should not be considered a solicitation for the purchase or sale of any
security. Copyright 2019 FMG Suite.
In the early morning hours of Friday, November 30th, I received the most unwelcome call from my father. “It’s your brother, Scott….he was found unresponsive and is in a medically-induced coma. We don’t know if he will make it.”
The death of a spouse is one of the most difficult experiences we will face in our lifetimes. The financial steps you take in the days and weeks that follow can have a major impact on your financial security as well as that of your family.
The best advice may be to simply do nothing right away.
Watch this 1-minute video for tips on what to do after your spouse passes away.
Estate planning can provide for the proper distribution of your assets to your beneficiaries after you die. In some cases, a living will or trust may help, especially if you have children who are minors or assets like mutual funds, brokerage accounts or other non-retirement assets that don’t pass via beneficiary designations.
To learn more the role a will or trust plays in your estate plan, watch this short video.