Informed Customers Pay Much Less For Insurance

Informed Customers Pay Much Less For Insurance

Informed Customers Pay Much Less for Insurance
It is​ widely known that insurance companies use factors such as​ your age,​ sex,​ and marital status to​ determine how much you​ are going to​ pay for your homeowner's and auto insurance .​
What you​ may not know is​ that your insurance company is​ most likely using information found in​ your credit report as​ well .​
In fact,​ the​ single biggest factor in​ your premium is​ usually what the​ insurance industry refers to​ as​ your insurance score,​ and that insurance score is​ calculated from information found in​ your credit report .​
Your insurance score is​ not tied to​ your credit score .​
you​ can't always be sure that your insurance score is​ good just because you​ have a​ good credit score or​ because you've not had any obvious negative information on​ your credit report such as​ a​ late payment.
Even though more than 90% of​ insurance companies use an​ insurance score in​ some way,​ most people are completely unaware that it’s affecting them .​
the​ reason that most people aren’t aware of​ this is​ because the​ insurance companies have not made this public information .​
the​ practice is​ as​ controversial as​ it​ is​ effective .​
Insurance companies have made millions of​ extra dollars by using this method of​ rate development but much of​ that would be lost if​ they were completely honest about this practice .​
They would have to​ hire extra employees to​ take phone calls from upset customers .​
They would also lose customers to​ the​ few companies that don’t yet use credit information in​ their rating practices .​

State governments are now passing legislation that requires insurance companies to​ notify their customers if​ credit information was used to​ generate their rates and if​ the​ best possible rate wasn’t achieved as​ a​ result .​
Many insurance companies chose to​ ignore this legislation due to​ the​ increased cost of​ notifying their customers and the​ potential that notifying them may make them angry enough to​ look elsewhere for insurance .​
Allstate and Progressive insurance companies were recently involved in​ multi-million dollar class action lawsuits for failing to​ notify customers as​ they are now required to​ do.
Since it​ is​ likely that your rates are being calculated by using an​ insurance score,​ there are a​ few steps that you​ should take to​ make certain that your score is​ as​ high as​ it​ can possibly be .​
First,​ check your renewal paperwork that your insurance carrier sends you​ .​
There should be a​ statement enclosed informing you​ of​ how your insurance score is​ affecting your rates .​
However,​ if​ there is​ no disclosure enclosed that does not mean that an​ insurance score is​ not being used .​
Second,​ you​ should pull copies of​ your credit reports annually to​ make certain that there is​ no erroneous information in​ them .​
An error can cost you​ hundreds of​ dollars .​
Third,​ you​ should make sure that you​ pay your bills on​ time,​ close any unused accounts,​ and don’t open accounts that you​ don’t need.
Insurance scores are much more complex than credit scores .​
Simply paying your bills on​ time just isn’t enough .​
Insurance scores use information such as​ what types of​ accounts you​ have,​ how long you​ have had them,​ and how many total accounts you​ have .​
Companies such as​ specialize in​ helping people improve their insurance scores .​
For a​ one-time fee they will analyze your credit reports,​ tell you​ exactly what you​ can do to​ improve your score,​ tell you​ how to​ make sure that your score stays high,​ and how you​ can use your improved score to​ save hundreds of​ dollars on​ each of​ your insurance renewals .​
Being well informed and taking some preventative actions is​ often the​ difference between paying a​ high rate and saving lots of​ money on​ your homeowner’s and auto insurance .​
With many insurance companies customers with high insurance scores pay up to​ 54% less for their insurance than a​ customer with a​ below-average score.

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