It's quite Texan to shop for better home insurance in Grapevine, and by better, we mean more cost effective and with the best protection in place. Texans have questions when they shop for insurance, and one of the most common questions has to do with the use of credit score in pricing insurance.
Maybe they've heard of some insurance carriers using it to gauge what price to charge and aren't certain how it can impact the price of what they purchase.
We won't mince words. At Insurance For Texans, we don't ascribe to all the ins and out of why credit scoring is used for pricing. But for your benefit, we'll cover how to best use this information.
It's fair to say that the majority of stand home insurance carriers use credit scoring to help determine pricing in Texas. Some get a little heavy with the usage. It is a reality.
Here's a helpful article by Bank Rate on how this happens.
Carriers want to know you'll be able to pay your premium bill. Premiums paid to the insurance company help them to pay claims. If you are a payment risk, they have to accommodate for that risk by charging your more on your premium.
Actuaries are employed through the insurance companies to help set rates for customers to pay regarding to coverage they receive. Data trends help them determine how/when to adjust rates.
One trend actuaries have found is that people with lower credit scores tend to file a larger majority of claims.
Two of the reasons actuaries have found include:
Carelessness - if someone is careless with their payments, a correlation could also indicate carelessness with their home, thus claims
Fraud - this population is more likely to risk insurance fraud to cover debts
Controversial? Heck yes. But that doesn't change the mind of the insurance companies. Credit score makes a difference and they adjust the price accordingly.
What Options Do You Have?
We always advise paying your bills on time to get the best benefits in life. You might even be able to pay in full to get a discount if your credit score isn't great. You can also seek and find insurance carriers who don't punish folks based on credit score.
That's where it pays to work with a local, independent insurance agency that deals in options with a vast network of carrier relationships.
We understand you may not have had the best circumstances. That doesn't rule us out from wanting to help.