Does Your Credit Score Affect Your Car Insurance Premium?


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.

Several Factors

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 balances low.

  1. 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.

The Right Legal Documents Play a Key Role in Your Financial Road Map

Banff, Canada

In this very personal letter to his clients, estate planning attorney Cory Wessman, shares why a well thought out healthcare directive is such an important part of your financial road map.

 

Posted with permission from the offices of Erickson & Wessman, Attorneys At Law:

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.”

How To Remove Luck From Your Financial Plan

Photo by Amy Reed on Unsplash

Too many people rely on luck or chance to meet their financial goals.

As if being in the right place at the right time or getting lucky with a hot investment was the missing ingredient to cashing in on the pot of gold at the end of their financial rainbow.

To be sure, it helps when the stars align in your favor. And if a lucky charm in your pocket makes you feel better, I am all for it.

But if you are serious about your financial well-being it’s going to take a lot more than a lucky roll of the dice to help you meet your goals.

Below are five ways you can stack the odds in your favor and reduce the role of luck in your financial life. Hint: The last one will surprise you.

A Primer on Dividends

How dividends can be used to increase your total return and provide reliable income in retirement

Photo by rawpixel on Unsplash

Many of my clients use dividends as part of their long-term retirement income plan. Dividends provide consistent, recurring income that often rises with inflation.

Even clients who are still in the “accumulation phase” of their investment plan can benefit from owning stocks and mutual funds that pay dividends.

Click here to see how.

 

A New Way To Look At Your Bucket List

When I turned 50 I had an ambitious bucket list. Most of the items on my list were things that I wanted to do “some day”. I quickly realized that “some day” may never come, and that if I ever wanted to check any of my bucket list items off the list that I had better get started.

In fact, some of the most important things on my bucket list were simple, day-to-day things that I was at risk of missing out on if I didn’t make them a priority in my life.

Below is a short video that suggests a different way to look at your bucket list.

 

A New Way to Look at Your Bucket List