Watch Out - Credit Score Determining Auto Insurance Cost
Insurance:
You hit another car; your auto insurer probably raises your premiums. But you may not know that your premiums can shoot up much higher if your car insurance company is using a new breed of credit score, even if you have a pristine driving record.
Known as credit-based insurance scores, these numbers are computed from your bill-paying and loan data collected by the major credit bureaus. In recent years, the scores have become as important in determining your annual premium as your driving record and the neighborhood where you live.
Hundreds of insurers are using models created by ChoicePoint and Fair Isaac, the Minneapolis company that invented credit scoring. Others have developed their own systems. The scoring models stress bits of credit data that would seem to have little to do with a driver's tendency to make claims. There are no standards: Each company uses different models and weighs different credit-report information. Some big companies find scoring useful only for new customers, not renewals, while others may use it for both.
Auto insurers use this credit information to produce an insurance score?because they believe it allows them to more accurately assess and price a risk. In conjunction with other information such as years of driving experience, previous accidents, the type of car or home, and where the driver lives and drives, credit-based insurance scores allow insurers to differentiate between lower and higher insurance risks.
These scores are not a measure of someone's financial assets, but of how you as an individual manage your financial affairs. Insurance scores are supposed to be highly accurate predictors of future loss in auto insurance. The statistical correlation between good credit and relatively low insurance losses presupposes that the responsibility required to prudently manage one's finances is associated with other types of responsible and prudent behaviors, such as proper maintenance of homes and autos, and safe operation of cars.
Many recent studies confirm the strong correlation between credit history and loss in both auto and homeowners insurance. Neither insurers nor the credit-scoring companies that discovered the relationship know what causes it. It is believed that generally people with a pattern of irresponsible financial behavior and poor credit history have a much greater chance of being in an accident or filing a claim. But the other studies, such as the Monaghan study, which reviewed those long-standing inferences, say that links between responsible financial management and future expected losses are "unsupported."
Either way scoring could cost you hundreds of extra dollars. Even a driver with a fantastic credit score, who rates a low-interest mortgage, could wind up with a less favorable insurance score and thus a high premium. That's because formulations for insurance scores weigh credit data differently from traditional lender scores.
There is a way to check. Under the Fair Credit Reporting Act of 1970, insurers are required to notify consumers if they experience adverse action, such as denial, premium increase or cancellation of coverage, due to information contained in their credit report. Consumers also have the right to have errors in their credit report corrected and can request that the insurance company recalculate their insurance score and reevaluate their insurance coverage and premium.
Receive a free online auto insurance quote that will save you money by visiting www.your-car-insurance.biz, a reliable auto insurance website that provides information and resources to include information on www.your-car-insurance.biz/Car_Insurance_Optional_and_Special_Coverage.html"> optional coverage.
Hot Topics In Insurance
Health Insurance Comparison - How To Find The Best Health Insurance
Many people struggle today with the everyday task of paying for their gas in their car. Rising costs of living have also taken away hundreds of dollars a month out of the regular person's pocketbook a...Steps to save money on your auto insurance
How to save money on auto insurance?Shop around for auto insurance and the price can vary buy a few hundred dollars, depending on the feature of the insurance and the company you buy from. B...
Splash Out On Better Auto Insurance
If you're interested in slashing your auto insurance bill in half then there's no reason why you shouldn't consider purchasing auto insurance online.Basic auto liability insurance policies con...
The Best Way To Apply For A Healthcare Plan
The initial step in arranging low cost health cover is to do your homework and to seek out a health plan that suits your needs and that can be found at a cost that matches your budget. For a lot of in...Life Insurance. Bargain Life Insurance When You Take Out A Pension Policy
At last, a real life insurance bargain but as always there are strings attached!If you take out a new pension policy after 6 th April 2006 and within the same premium pay for life insurance cover,...
Online Auto Insurance - Getting It Cheap Has Never Been So Easy
That's a phrase that will get any car owner's attention. Whether you are the sole driver on your insurance plan, have recently added a new teenage driver, have had multiple vehicle accidents or none a...
Vending Machine Business Seminars
You may have seen advertisements for vending machine business seminars that are of interest to you. Before you sign up for one of them though you really need to find out more about the business that o...An Overview Of Travel Insurance
International travel health insurance is a policy that covers your medical expenses no matter where in the world you may be. When you travel and decide to live outside the United States, the local ins...The Two Basic Kinds Of Life Insurance
Life insurance offers every consumer a way to take care of loved ones for years to come, even if he or she won't be around to put food on the table. The basic idea of life insurance is that during an ...7 Things To Do Before Buying Travel Insurance
Going back to Roman times, risks have been shared during times of tragedy and unforeseen circumstances, such as earthquakes, floods and the like. The first formal and recorded insurance company, Lloyd...Search For Cheap Insurance Online: 17 Tips for Getting the Best Insurance Quotes
Does the thought of searching for quality, reliable insurance make you cringe? Looking for affordable insurance, whether it's auto, home, life, health, renter's and so on, is much easier then you thin...Reasons To Consider Travel Insurance
When planning a trip out of the country one of the major considerations, after the booking of plane tickets and hotel rooms are arranged, must be travel insurance. As an American traveling to Europe o...
Most Recent Insurance Supplements
- Health Insurance Comparison - How To Find The Best Health Insurance
- Some Statistics On Critical Illness Cover
- Steps to save money on your auto insurance
- UK Vehicle Insurance - Who Pays For Emergency Treatment?
- Are MLM Systems Important?
- Choosing A Veterinary Pet Insurance Company
- Self Insure Yourself And Save Money
- Vending Machine Business Seminars
- What You Should Know About Low Cost Health Insurance
- Simple Math: Individual Dental Insurance vs Discount Plan
- Why You Should Take Time To Find The Best Life Insurance Quotes As Soon As You Can
- The Secrets To Getting The Best Motorcycle Insurance Quotes!
- Affordable Car Insurance - It Is Out There!
- Information On Buying Auto Insurance
- Are You Uninsurable For Life Insurance?
- An Overview Of Travel Insurance
- Out On The Edge - The Lack of Health Insurance Benefits For Nonstandard Workers In Texas
- Insurance Haters Anonymous
- Insurance Safety Net For You
- Splash Out On Better Auto Insurance
