I do pay my bills on time. What other factors would a carrier consider while evaluating my risks?
Total Comments: 7
Posted: Tue May 04, 2010 12:00 am Post Subject:
What type of insurance are we advising you about? Life, health, auto, homeowners's, workers' comp, commercial liability? Each has its own set of underwriting criteria.
Posted: Tue May 04, 2010 07:37 am Post Subject:
Each has its own set of underwriting criteria.
I thought all major types of insurance would consider the same factors for risk evaluation. Anyway, can I get a clear picture of risk factors that are counted while determining whether or not to offer a health and home insurance policy?
Posted: Tue May 04, 2010 01:30 pm Post Subject:
OK. Think of it this way . . . if you have a heart attack, what does that have to do with your home burning to the ground or being vandalized or burglarized?
When you ask about "offering a health and home insurance policy", you aren't asking about one policy that covers both contingencies are you? Because there isn't anything like that that I am aware of. The two risks are not at all similar.
Health insurance covers hospital and doctor/surgeon bills, and most related medical expenses. So the risk factors are those related to your past, present, and future health status. Whether you own a home or not, whether you drive a car or not, whether you have life insurance or not, those are not risk factors in health insurance. Family history of heart disease, being overweight, prior surgeries, and broken bones, a history of headaches, treatment for cancer . . . the list is nearly endless . . . those are just a few of the risk factors in health insurance.
When we think of insuring a home, your health is unimportant. It's not something covered by the policy. The age of the house, the condition of the wiring, proximity to brush/forested land, nearest fire hydrant and fire station, type of construction and cost to rebuild the structure, cost to replace the contents, special items of value (coin & stamp collections/firearms/jewelry/fine art), these are some of the risk factors to be considered. Own a dog? May not be able to get homeowner's insurance in the standard market due to the risk of someone being bitten by the dog.
As previously stated, every type of insurable risk presents its own unique set of risk factors. There can be common elements in some forms of insurance (life and health insurances share a common interest in the general health of the insured at the time of application for the insurance, but they may weigh the factors differently, a decline in health insurance is not always a decline in life insurance) -- many health insurance policies decline persons like me who had surgery to fix a broken bone and have a plate and screws still inside my leg. But it has absolutely no effect on my ability to qualify for life insurance.
Perhaps a different way to explain it has to do with something called "risk pooling". Insurance companies make a pool of insureds who have a similar risk. Life insurance pays when someone dies, so people who are concerned about leaving money behind after their death would be one pool of risk. People who drive automobiles are another pool of risk. Motorcycles are also a means of transportation, but would not be in the same risk pool as automobiles. Big rig trucks are in a pool of their own. The risk of a dwelling becoming uninhabitable as the result of fire, flood, windstorm, lightning, earthquake, etc, has nothing to do with driving a car, so that risk is in its own pool with other similar dwellings, but we don't put high rise hotels in the same pool and single family dwellings because the risks, while similar, are not the same. Hospital and doctor bills have nothing to do with dying too soon (unless the bill gives you a heart attack), so those risks are not in the pool of life insurance risks.
Each pool is separate and distinct, and the likelihood of any one risk creating a claim can be fairly accurately predicted within the pool. We just cannot predict which specific risk will suffer a loss today. Because your risk is mixed in with my risk and lots of other folks' risks, insurance is made more affordable because not all of us are going to suffer a loss today, or tomorrow, or the next day. Some of us may never suffer a loss.
Hope this helps.
Posted: Wed May 05, 2010 08:53 am Post Subject:
I guess all insurance carriers would be interested to know the percentage of your available credit that has been used already. Insurers would also look at your insurance score to decide the chances of your filing claims with them.
Posted: Wed May 05, 2010 02:49 pm Post Subject:
Although using credit scoring to qualify a person for insurance is done frequently by some companies, many states (such as CA) prohibit the use of that information as the reason for a decline. Other states, such as PA (if I'm not mistaken) allow a person to be declined for auto insurance simply on the basis of their credit report.
Posted: Fri May 07, 2010 10:57 am Post Subject:
Anyway, can I get a clear picture of risk factors that are counted while determining whether or not to offer a health and home insurance policy?
If it's about home insurance, your insurer has the access to key crime risk data in and around your locality. They'll decide on your home insurance rate once they arrive at your crime-risk score based on the past and present crime records in your locality.
Posted: Sat May 08, 2010 10:15 am Post Subject:
See, it's not just about the statistics concerning crime. There are other factors like the worth of properties, turnover in your neighborhood as well as the average income in your neighborhood. All these factors when taken in to account would determine your score.
Posted: Tue May 04, 2010 12:00 am Post Subject:
What type of insurance are we advising you about? Life, health, auto, homeowners's, workers' comp, commercial liability? Each has its own set of underwriting criteria.
Posted: Tue May 04, 2010 07:37 am Post Subject:
Each has its own set of underwriting criteria.
I thought all major types of insurance would consider the same factors for risk evaluation. Anyway, can I get a clear picture of risk factors that are counted while determining whether or not to offer a health and home insurance policy?
Posted: Tue May 04, 2010 01:30 pm Post Subject:
OK. Think of it this way . . . if you have a heart attack, what does that have to do with your home burning to the ground or being vandalized or burglarized?
When you ask about "offering a health and home insurance policy", you aren't asking about one policy that covers both contingencies are you? Because there isn't anything like that that I am aware of. The two risks are not at all similar.
Health insurance covers hospital and doctor/surgeon bills, and most related medical expenses. So the risk factors are those related to your past, present, and future health status. Whether you own a home or not, whether you drive a car or not, whether you have life insurance or not, those are not risk factors in health insurance. Family history of heart disease, being overweight, prior surgeries, and broken bones, a history of headaches, treatment for cancer . . . the list is nearly endless . . . those are just a few of the risk factors in health insurance.
When we think of insuring a home, your health is unimportant. It's not something covered by the policy. The age of the house, the condition of the wiring, proximity to brush/forested land, nearest fire hydrant and fire station, type of construction and cost to rebuild the structure, cost to replace the contents, special items of value (coin & stamp collections/firearms/jewelry/fine art), these are some of the risk factors to be considered. Own a dog? May not be able to get homeowner's insurance in the standard market due to the risk of someone being bitten by the dog.
As previously stated, every type of insurable risk presents its own unique set of risk factors. There can be common elements in some forms of insurance (life and health insurances share a common interest in the general health of the insured at the time of application for the insurance, but they may weigh the factors differently, a decline in health insurance is not always a decline in life insurance) -- many health insurance policies decline persons like me who had surgery to fix a broken bone and have a plate and screws still inside my leg. But it has absolutely no effect on my ability to qualify for life insurance.
Perhaps a different way to explain it has to do with something called "risk pooling". Insurance companies make a pool of insureds who have a similar risk. Life insurance pays when someone dies, so people who are concerned about leaving money behind after their death would be one pool of risk. People who drive automobiles are another pool of risk. Motorcycles are also a means of transportation, but would not be in the same risk pool as automobiles. Big rig trucks are in a pool of their own. The risk of a dwelling becoming uninhabitable as the result of fire, flood, windstorm, lightning, earthquake, etc, has nothing to do with driving a car, so that risk is in its own pool with other similar dwellings, but we don't put high rise hotels in the same pool and single family dwellings because the risks, while similar, are not the same. Hospital and doctor bills have nothing to do with dying too soon (unless the bill gives you a heart attack), so those risks are not in the pool of life insurance risks.
Each pool is separate and distinct, and the likelihood of any one risk creating a claim can be fairly accurately predicted within the pool. We just cannot predict which specific risk will suffer a loss today. Because your risk is mixed in with my risk and lots of other folks' risks, insurance is made more affordable because not all of us are going to suffer a loss today, or tomorrow, or the next day. Some of us may never suffer a loss.
Hope this helps.
Posted: Wed May 05, 2010 08:53 am Post Subject:
I guess all insurance carriers would be interested to know the percentage of your available credit that has been used already. Insurers would also look at your insurance score to decide the chances of your filing claims with them.
Posted: Wed May 05, 2010 02:49 pm Post Subject:
Although using credit scoring to qualify a person for insurance is done frequently by some companies, many states (such as CA) prohibit the use of that information as the reason for a decline. Other states, such as PA (if I'm not mistaken) allow a person to be declined for auto insurance simply on the basis of their credit report.
Posted: Fri May 07, 2010 10:57 am Post Subject:
Anyway, can I get a clear picture of risk factors that are counted while determining whether or not to offer a health and home insurance policy?
If it's about home insurance, your insurer has the access to key crime risk data in and around your locality. They'll decide on your home insurance rate once they arrive at your crime-risk score based on the past and present crime records in your locality.
Posted: Sat May 08, 2010 10:15 am Post Subject:
See, it's not just about the statistics concerning crime. There are other factors like the worth of properties, turnover in your neighborhood as well as the average income in your neighborhood. All these factors when taken in to account would determine your score.
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