Tuesday, July 23, 2013

Insurance score- what is it?

Insurance score is one of the most important factors used by insurance company when determining your rate for home and auto insurance.  You should know about it because a great insurance score will save you hundreds on your auto and home insurance.  
Insurance score is a numeric system similar to a credit score.  Some variables used to calculate insurance score are: credit score, paying history, # of open accounts, your financial habits and choices.
Why does the home and auto insurance company care for the above mentioned factors?  Insurance companies have found direct correlation between high insurance scores and probability of future claims.   High insurance score=low probability of future claims.  Low probability of future claims=low insurance premium.
I have seen cases where clients have saved $700 a year for having an excellent insurance score.  Unfortunately, I have also seen cases where client was charged extra $700 a year for having a poor insurance score.  

What can you do to maximize your insurance score?  Having a high credit score helps, but people that regularly make conservative financial decisions always have the highest insurance score.  Also, always pay your insurance bill on time, and if you can, pay in full.  If you choose to pay in installments try to budget for the billing plan that has the least # of installments.

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