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R&R Insurance Blog

Your Credit Report Affects Your Insurance Score!

Posted by Dan Wolfgram

Your credit report not only has an impact on your financing options for your home and car, it also affects your insurance score, which ultimately affects your homeowners insurance premiums. Insurance companies only consider those items from credit reports that are relevant to insurance loss potential. Both an insurance score and a credit score are derived from the same thing – a credit report, but they are distinctly different. Insurance scores are calculated using the following types of information:

  • Payment history: Have you made late payments or missed a payment?
  • Length of credit history: How long have you been using credit?
  • Current balance on each account compared to your highest balance: For example, if you had high credit card balances before are they lower now?
  • Number of credit accounts: How many accounts do you have? This may include credit card accounts or installment loans.
  • Credit inquiries: How often have lenders made inquiries into your credit report? This does not include “soft inquiries,” such as when a company reviews your credit report to make a promotional offer. (Credit inquiries are not used in all states.)
  • Bankruptcies, foreclosures and other collection activity (Bankruptcy information is not used in all states.)

An insurance score does not take into account income, race, gender, religion, marital status, national origin, geographic location.

Why do insurance companies use insurance scores?
Insurance scores provide an objective tool that insurers use along with other applicant information to better predict the likelihood of a consumer to file a claim. Insurance scores also help to streamline the decision making process, so that policies can be issued more efficiently. By accurately predicting the likelihood of future claims, insurers can control their risk, enabling them to offer insurance coverage at a fair cost.

How do I get a copy of my credit report?
Because information obtained from a credit report is used to determine an individual’s insurance score, customers should periodically obtain a copy of their credit report to confirm its accuracy. Your credit report can be obtained from the three major credit bureaus.

  • Equifax: 800-997-2493
  • Experian: 888-397-3742
  • Trans Union: 800-888-4213

What can I do to improve my insurance score?
Here are a few things you can do to improve your credit report and insurance score:

  • Apply for and open new credit accounts only as needed. Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. Over time, responsible use of credit can increase a customer’s insurance score.
  • Keep balances low on unsecured revolving debt like credit cards. High outstanding debt can affect an insurance score.
  • Pay bills on time. Delinquent payments and collections can have a major negative impact on an insurance score.

If you are a Wisconsin resident and would like more information on improving your insurance score, contact knowledgebroker, Dan Wolfgram.

Topics: Insurance, Personal Insurance, credit score, financial history, loss history, loss potential, insurance score, improve insurance score

12 Ways to Lower Your Homeowners Insurance Costs

Posted by Brandy Enger

Let's face it, we're all looking for ways to trim our expenses. Here are 12 ways to make sure that the value you are getting from your homeowners policy is real, and to ensure that you aren't paying more than you need to.

  1. Raise your deductible
    Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums. Most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25%.
  2. Insure for replacement cost, not market value
    The housing market has dropped significantly, but that doesn't mean the cost to rebuild your home has dropped as well. Insurance companies insure homes based on the amount it would cost to rebuild, including debris removal, architect fees, etc., not the assessed value of the home. In today's economy, these two values can be drastically different. It is important to make sure your home is insured based on replacement cost, and that it does not include the cost of land.
  3. Package your home & auto policies together
    Some companies that sell homeowners, auto and umbrella coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. Luckily, R&R Insurance represents numerous companies that do just that!
  4. Newer/updated homes may be eligible for discounts
    Find out from your insurance agent what steps you can take to make your home more resistant to windstorms and other natural disasters. You may be eligible for premium discounts if your home is constructed with fortified home materials, such as HardiePlank siding, or has an impact resistant roof.
  5. Improve your home security
    Some companies offer to cut your premium if you have a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. If you have a security system, be sure to mention it to your insurance agent as the discount for security systems average anywhere from 10-25% of the home premium.
  6. Maintain a good credit record
    Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price insurance policies. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate. More about insurance scoring...
  7. Stay with the same insurer
    If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more.
  8. Review the value of your scheduled items and rec vehicles at least once a year
    You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need. For example, if your five-year-old fur coat is no longer worth the $5,000 you paid for it, you'll want to reduce the amount on your insurance policy. Rec vehicles and watercraft also tend to depreciate with age; be sure to check with a reputable dealer or other on-line valuation service to ensure you are not over insured.
  9. Buy a longer policy
    There may be a price penalty attached to 3- or 6-month policies, so the longer your policy term, the cheaper your rates will likely be. Regardless of the length of your policy, you may be able to avoid installment fees and save money by paying it in full instead of in monthly installments. If installments are the only affordable option, you may be able to avoid fees by having your premiums automatically deducted from your bank account each month.
  10. When you're buying a home...Location Location Location
    You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department.
  11. You could be eligible for a discount between 5 -10% depending on the age and location of your electrical, heating & plumbing systems
    If your single family home or condo is less than 30 years old, or if your home mechanics have been upgraded during that time, you may qualify for an elite home program with some insurance companies. This could save you up to 10% on your yearly premium.
  12. Reduce your auto coverage to comprehensive only during winter months
    If you have vehicles that you do not use during the winter months or for long periods of time during the year, you can save some money by removing the liability from them while they are idly stored. By carrying comprehensive only during these times, your vehicle is still covered for things like theft, fire, vandalism, etc. Your liability coverage can be added back on when you decide to use the vehicle again.

Wisconsin residents, be sure to contact knowledgebroker, Brandy Enger, for the best valued personal lines insurance in Wisconsin!

Topics: Personal Insurance, saving money on insurance, insurance discounts, save, discounts, personal property value, package policies, credit record, lower insurance costs, insurance score, long policy term, rais deductible