by sue_bruno » Tue Apr 06, 2010 02:09 pm
I live in New Jersey, Burlington County and they have put in for a rate increase. they say if I give them permission to run a credit check on me, then I may get a reduced rate this year but no promises. Why do they need this? It's Fidelity National Property & Casualty Insurance Co. which I bought through my car agent, Allstate.
Posted: Tue Apr 06, 2010 05:30 pm Post Subject: Credit Scoring on Homeowners Insurance
Most insurance companies are now using credit scoring to determine pricing and eligibility. If you have an excellent credit score you will generally get a lower rate and if you have a low credit score your rate will be higher.
This has nothing to do with whether or not you will pay the premium. Insurance companies have done multiple studies that indicate there is a direct correlation between your credit score and the probabilty of you filing a claim. The lower the credit score, the more likely you are to file a claim.
They need your approval because the Fair Credit Reporting Act will not allow them to check you credit without your OK.
I am personally not a big fan of the whole credit scoring thing, but this is why they are asking you for this.
Posted: Tue Apr 06, 2010 06:17 pm Post Subject:
Resisting urge to rant against insurance companies using non-relevant information in policy ratings....
As mentioned, insurance companies have been using credit rating to adjust rates. It's been shown that people with better credit scores are _less likely to file a claim_. So the chance that an insurance is going to pay out on a claim is lower, so the rate is either increased or lowered (depends on how you look at it) based on this information.
Good for you InsuranceDude... you are not buying into this scam!
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