Home Insurance and a First-Time Home Buyer’s Mistake

Posted by on Oct 16, 2017 in Blog | Comments Off on Home Insurance and a First-Time Home Buyer’s Mistake

Home Insurance and a First-Time Home Buyer’s Mistake

A friend of mine who’s in the water, fire, and smoke damage servicing business asked me to talk with one of his client’s last week. The client was a first-time home buyer and needed some advice on how to deal with a home insurance claim for 6 leaks beneath his slab foundation. His homeowner’s insurance policy was woefully inadequate to deal with the claim as it didn’t have the right coverage added to it.

He shared his story with me. As a first-time home buyer, he reviewed the home insurance quote from the carrier he has his car insurance with and determined it was too expensive. He talked with another home insurance agent and stated he wanted the “cheapest policy” available. He got that, but as it turns out, he wished he’d paid more to purchase a couple of options which would have helped him.

All home insurance policies have a variety of options available, but it’s up to the buyer to confirm they are included and avoid the fate of this home buyer. Here are 4 options I believe all homeowners should have.

Water Damage: Most policies provide some level of coverage for damage caused by a water leak. The coverage is usually limited to “sudden and accidental” leaks such as a pipe bursting, an appliance leak, a ruptured water heater, etc. There may be a dollar limit, so I recommend at least $25,000 in coverage and more if it’s available. It takes more than most people realize to replace wood flooring, sheetrock, etc. that’s damaged by a significant water leak.

Slow Leak: A few home insurance companies provide optional coverage for damage caused by a slow leak. This type of leak usually occurs under appliances or sinks, behind walls, or around pipe joints and often go undetected until hardwoods warp, tiles pop, or mold grows on sheetrock because they are hidden from sight. If the option is available, I highly recommend it.

Sewage Backup: Having sewage back up into your home is a nightmare, and most home insurance policies don’t include coverage for it. Clean up requires a hazmat team which is why I recommend this coverage which is expressed in a dollar amount.

Foundation Coverage: Texas soil has a high clay content which expands when we have rain and contracts when we don’t. While damage to the foundation due to soil movement isn’t covered by any home insurance policy, damage caused by leaks under a foundation from water supply lines is covered.

This option provides coverage to access (cutting through the slab to get to the leak) and egress (filling it back in and tying it into the existing slab). Anyone with a slab foundation should have this option.

What was missing from the homeowner’s policy was foundation coverage. If he had it, most likely his policy would have covered the damage to the home caused by the leaks beneath the slab. He succeeded in saving a few hundred dollars in premium by buying the cheaper policy, but he’ll be out at least $15,000 to make the repairs his home now needs. What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Is a Car That’s Been Broken into a Car Insurance Claim?

Posted by on Oct 11, 2017 in Blog | Comments Off on Is a Car That’s Been Broken into a Car Insurance Claim?

Is a Car That’s Been Broken into a Car Insurance Claim?

A client texted me early Monday morning letting me know his car was broken into overnight. The good news was his car wasn’t stolen. What was stolen, though, was his wallet, watch, possibly his passport, a ring, and a few other items. His question was, did his car insurance policy cover this? He has “full” coverage policy on his car which results in a yes and no answer. Let’s look at the reasoning behind the two answers.

Yes: If the car were damaged during the break-in, such as a window being broken or the door bent from the use of a crowbar, then yes, his car insurance policy would have covered repairs for the damage less the deductible. Comprehensive coverage, which he has, covers vandalism to a car, as well as a broken window or windshield.

In his case, the driver’s window was left cracked open allowing the thief to easily unlock the car and enter it. Since no damage was done to his car, there is no need to file a car insurance claim. Filing one would result in a $0 paid claim which may make it difficult to move him to another carrier who may provide a better rate.

No: The contents which were stolen from his car are not covered by his car insurance policy. They are covered under a home or renter’s insurance claim. Surprised? Most people are very surprised when I share that with them.

The majority of insurance companies who write home, renter’s, and condo insurance, provide some coverage for personal property, or contents, off premises from the home. Usually it’s about 10% of the amount of contents coverage on the policy and it covers personal property in your car, while traveling, and even in a storage unit or facility.

The items taken from my client’s car, are considered personal property or contents off premises. The issue is whether such a loss exceeds the home / renter’s insurance policy deductible? In most cases, it doesn’t. Further complicating the issue is my client doesn’t have renter’s or home insurance since he’s living with his fiancé. Her policy probably doesn’t cover it either as she does not have an insurable interest, or ownership, in the stolen property.

What happened to my client is unfortunate. He appreciated our discussion even if he didn’t like the answers. It serves as a great reminder for all of us to not leave a purse or wallet with our driver’s license, credit and debit cards in it. Never leave your social security card or passport in your car as these two documents can lead to a stolen identity more quickly than just your driver’s license. Always lock your car and put anything of value into the trunk.

The good news for my client is the thief didn’t discover the expensive set of golf clubs in the trunk! What’s in your car you need to take out today? Share that with me, along with your comments, questions, and experiences on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Potential Changes in the Flood Insurance Program

Posted by on Oct 9, 2017 in Blog | Comments Off on Potential Changes in the Flood Insurance Program

Potential Changes in the Flood Insurance Program

The National Flood Insurance Program, or NFIP, was already in deep debt, to the tune of $24.6 billion, before Hurricanes Harvey, Irma, and Maria, and Tropical Storm Nate hit our shores. Further complicating matters, the Congressional Budget Office, or CBO, is projecting a budgetary shortfall of $1.4 billion. Let’s examine what’s causing the budgetary shortfall and what the future implications are for the flood insurance program.

Budgetary Shortfall: The cause for the budgetary shortfall is due to the difference between how premiums are calculated for coastal counties versus inland counties affected by flooding from lakes, rivers, streams, and creeks. In short, the program doesn’t charge enough for flood insurance for properties in coastal counties to cover wave damage such as we experience in hurricane storm surge.

Storm surge accounts for 37% of all flood insurance claims. When this is added to hurricane related flooding claims due to rain (16%), tropical storms (5%), and nor’easter coastal storms (2%) it far outweighs inland flooding claims which total 36% of all flood claims. Adding to the unbalanced rates, flood insurance policies in coastal counties account for 75% of all NFIP policies. Unless something changes, the NFIP’s coffers will run dry soon.

Congress and the Trump administration are eyeing changes to the flood insurance program due to the budgetary challenges and outstanding debt the NFIP has. Here are a couple of ideas being considering.

Deny Coverage: Mike Mulvaney, the director of White House Office of Management and Budget, believes flood insurance should be denied to homes built in flood plains after 2020. Coverage for existing homes in a 100-year flood plain would be continued, but no coverage would be available for new homes constructed in these areas.

If this were to become law, homeowners will need to find private flood insurance which is usually more expensive than flood coverage from NFIP. President Trump has expressed similar statements where coverage would be denied for homes most at risk for flooding. As you can imagine, the National Association of Home Builders is opposed to this idea.

Cut Off Coverage: Mulvaney’s plan also provides additional powers to cut off coverage from properties which flood repeatedly. No details have been provided as to how many times a property would have to flood before being cut off, however, when it occurs, the homeowner would be forced to find private flood insurance if it’s available.

Raise Rates: None of the news reports have mentioned a rate increase. Most private carriers raise home insurance rates after major storms. Rates in north Texas for home insurance continues to climb due to the massive hail storms in 2016 and 2017. One easy way to slow the budgetary shortfall is to raise rates in areas in coastal areas. This is not an appealing solution for those who live in our coastal communities, but may help forestall the more drastic action of denying and cutting off coverage.

Rebuilding Changes: One group has proposed a plan allowing flood coverage to remain in effect for homes currently in flood zones if they were raised at least two feet above the flood plain. This is an expensive proposition for homeowners but may provide the best long-term alternative to owning a home that can’t obtain flood insurance.

What happens is anybody’s guess. What do you think should be done? Share your thoughts, experiences, and questions with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you.

Thanks!

Ed Wise

Wise Insurance Group

What is Forced Place Insurance?

Posted by on Oct 4, 2017 in Blog | Comments Off on What is Forced Place Insurance?

What is Forced Place Insurance?

In July of this year, news agencies announced Wells Fargo forced unwanted car insurance on 500,000 to over 800,000 of its car loan customers, most of whom had valid car insurance. The type of insurance used is referred to as forced place or lenders insurance. The results of this practice were devastating; 274,000 of Wells Fargo’s customers were forced into delinquency and 25,000 vehicles were wrongfully repossessed. Wells Fargo reaped millions in revenue and fees from this practice.

Forced place insurance is written by the lender when a borrower has a lapse on their car, boat, RV, or home policy. It’s designed to protect the lender in the event of a loss and is usually written with enough coverage to pay off the loan. This policy isn’t a gift; the cost of a forced place insurance policy is rolled into the monthly payment the borrower makes. If the borrower refuses to pay the new amount, the asset is repossessed.

Forced place insurance on a car means the policy provides much less in coverage than a standard car policy.

  • It may or may not extend liability coverage to the car you hit if you’re at fault in the accident.
  • There is no medical or personal injury protection coverage for you if you or a passenger are injured.
  • There’s no rental car reimbursement or roadside assistance coverage.

In the case of home, condo, flood and wind versions of force placed insurance:

  • These policies protect the home up to the value of the loan.
  • If there’s a total loss, the loan is paid off but the borrower is left holding the bag for everything else.
  • There’s no coverage for contents or personal property.
  • There’s no liability or medical coverage.
  • There’s no coverage for loss of use.

The purpose of lender placed insurance is to recoup the money they’ve loaned the borrower for the lost property.  The borrower may still be liable for medical charges, repairs to another person’s vehicle, demolition of a home, and debris removal.

Forced place insurance is expensive too, costing anywhere from the same as a standard policy to twice as much. In a few instances, it may cost as much as 10 times the cost of a policy from a standard carrier.

The good news is borrowers may replace forced place insurance with their own coverage simply by obtaining a policy from the company of their choice. I’ve replaced several forced placed insurance policies with real car and home insurance.  In all but one instance, the savings were huge.  In that case, the client wound up paying about $100 more a year, but they considered it a bargain once they understood how little the lender’s insurance policy covered.

I understand the need lenders have in writing these policies, but individuals don’t have to be stuck with it. Do you have a question, comment or experience you’d like to share?  Share them with me my Facebook, Google +, and LinkedIn pages.  I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Dog Breeds Home Insurance Companies Don’t Like

Posted by on Oct 2, 2017 in Blog | Comments Off on Dog Breeds Home Insurance Companies Don’t Like

Dog Breeds Home Insurance Companies Don’t Like

I was talking with a prospective client the other day and getting the information needed to quote home insurance for her new home. She laughed when I asked her if she had any dogs. She does – 4 Chihuahuas! We both had a good laugh although she also understood that while her Chihuahuas were not an issue for a home insurance company, there are breeds carriers won’t write even if they behave nicely.

There are several dog breeds home insurance carriers will decline to write a home or renter’s policy for. These breeds may also result in the insurance company canceling or not renewing the policy if they are acquired after the policy goes into effect. The most common breeds include;

  • Pit Bull
  • Rottweiler
  • Doberman Pinscher
  • German Shepherd
  • Akita
  • Chow
  • American Staffordshire Terrier
  • Dingo
  • Husky
  • Italian Mastiff
  • Malamute
  • Wolf (or wolf mix)
  • Great Dane

The aggressive breeds are the most obvious due to their history or reputation of dog bites (Pit Bull, Rottweiler, Doberman, etc.).  Some home insurance companies have changed their perspective on German Shepherds and will write a home policy for someone who owning a Shepherd. The change in heart is the result of low claim activity on Shepherd’s to a level equal with the “good dogs” (Labrador and Golden Retriever, etc.). The big breeds (Great Dane, Italian Mastiff, etc.) are on some carriers’ do not write list due to their size. In these cases, underwriters are concerned they may knock someone over such as a child or elderly parent which could result in a claim.

There are a few carriers who will write a home insurance policy for someone with an aggressive dog breed, however they exclude liability coverage for a dog bite. I’m not comfortable with that approach because if someone is hurt, the homeowner would be held personally liable to pay for any medical bills out of their own money.

Consult with your agent if you own one of the dogs on this list to see what your options are.  If you are considering one of the obvious aggressive breeds, know you’ll have fewer choices for home or renter’s insurance and it will be more expensive.  If you own rental property, address what is and is not an acceptable pet in your lease contract.  I’ve seen owner’s rental property policies cancelled based on a tenant having a Pit Bull.   If you have a question, comment, or experience you’d like to share, post it on my Facebook, Google +, or LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Commercial Flood Insurance

Posted by on Sep 27, 2017 in Blog | Comments Off on Commercial Flood Insurance

Commercial Flood Insurance

Hurricane Harvey knocked the power out to the Arkema Chemical Plant in Crosby, Texas. The situation worsened when the flooding rendered the emergency generators inoperable. The chemicals Arkema produces include adhesives for baby diapers, resins used in plastic automotive parts, and peroxides. The peroxide products must be refrigerated so they don’t break down. If they do begin to break down, they produce heat which caused the fire and explosions we witnessed while Harvey dumped trillions of gallons of water on the Houston area. If anything, Arkema provides an excellent example of the importance of commercial flood insurance.

There are two types of commercial flood insurance, standard flood insurance, which is a FEMA administered policy and excess flood insurance. Both serve a purpose for small, medium, and large businesses and offer coverage to help get the business back up and running.

Standard Flood Insurance: The commercial flood insurance policy administered by FEMA and the National Flood Insurance Program, or NFIP, can provide coverage for;

  • Building Property up to $500,000
  • Business Personal Property up to $500,000
  • Businesses may purchase either one or both

Building coverage may be for the actual physical building the business operates in, if it is owned by the business. Standard commercial flood policies cover the following items:

  • The building and foundation
  • Electrical and plumbing systems
  • Water heaters, HVAC, and ventilation equipment
  • Permanently installed carpeting, paneling, wallboard, bookcases, and cabinets
  • Pumps, pumping machinery, awnings, canopies, and walk in freezers
  • Fire extinguishing and sprinkler systems
  • Outdoor antennas and aerials attached to the building

Business personal property coverage pertains to office and electronic equipment and the following items:

  • Furniture and fixtures, machinery equipment, and other personal property owned and used by the business
  • Stock including merchandise held in storage or for sale, raw materials, and in process or finished goods
  • Portable and window air conditioners, microwave ovens, and portable dish washers
  • Carpets and rugs not covered in the building coverage
  • Clothes washers and dryers
  • Food freezers (not walk in) and the food in the freezer
  • Certain valuable items such as original artwork and furs ($2,500 total limit)
  • Non-licensed self-propelled vehicles if stored inside and used to service the location or assist a person with a disability
  • Up to 10% of the contents coverage for tenant improvements made to a leased facility

What’s not covered under a standard commercial flood insurance policy are financial losses caused by business interruption or loss of use from a flood.

Excess Flood Insurance: If the $500,000 of property or business personal property isn’t enough to meet the business’ needs, excess flood insurance is available from a variety of carriers. As the name implies, this coverage is designed to start where the standard FEMA policy stops, such as buildings and personal property valued at more than $500,000. There may be two additional differences worth exploring if the business has the need:

  • Coverage can be written on a replacement cost basis
  • Financial losses or loss of use can be included

Which and how much coverage a business needs will be largely determined by the value of the building, personal property, and potential for lost revenues. What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

How Your Policy Affects Your Home Insurance Rate

Posted by on Sep 25, 2017 in Blog | Comments Off on How Your Policy Affects Your Home Insurance Rate

How Your Policy Affects Your Home Insurance Rate

Over the past two weeks we’ve examined how you and your home impacts what you pay for home insurance. Your home policy also impacts what you’ll pay, so let’s delve into four common areas that lower or raise your rate.

Policy Type: There are two broad policy types, one which pays claims on an actual cash value or depreciation basis and one which pays them on a replacement cost basis. In most cases, the actual cash value policies will cost less than a replacement cost policy but their savings may result in a higher out of pocket expense when filing a claim.

Within the replacement cost policies, different carriers offer different policy types including named perils and broad form policies. The named perils policies only pay claims on the perils the policy specifically states it covers such as fire, smoke damage, water leaks, etc. Broad form home insurance policies cover all perils unless they are specifically excluded such as acts of war, terrorism, nuclear accident, etc. Broad form policies usually cost a little more than a named peril policy, but this depends on the carrier.

Coverage: All home insurance policies come with a range of standard coverage based on their type and the perils they address, yet there are several options that may provide more complete coverage. These options may include coverage for water damage, slow leaks, foundation, water and sewage backup, home office equipment, electronics, musical instruments, and scheduled items. The more options you add, the more the policy costs.

Discounts: Everybody loves a discount which reduces what you pay for your home insurance policy. The most common discount offered is the multi-policy or auto / home discount. All carriers who write both home and car insurance offer this discount on both policies. In many cases, bundling the policies together provides an attractive savings on both. Many carriers which write only home insurance may provide a “companion” policy discount for having both policies with the agency.

Other discounts include early quoting for having a new policy quoted 14 to 30 days prior to needing coverage, monitored alarm discounts (fire and burglary), payment discounts, and even discounts for what school you went to, education level, marital status, age of roof, home buyer and more. Always ask what discounts are available and which ones fall off after the first year.

Prior Claims: Claims usually have a negative impact on your home insurance rate. Some carriers count the prior owner’s claims against a new home buyer although, many don’t. Claims follow the home buyer or owner and will impact your rate for up to five years. This impact may be the loss of a claim free discount or the rate being surcharged as in the case of a water, fire, or theft claim. Ask what is impacting the rate if it seems high to you.

The key to knowing what raises or lowers your rate is to have a detailed discussion with your agent as you review a quote or your renewal packet. What do you think? Share your comments, questions, and experiences on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Identity Theft and The Equifax Hack

Posted by on Sep 20, 2017 in Blog | Comments Off on Identity Theft and The Equifax Hack

Identity Theft and The Equifax Hack

A little over 10 days ago, news stories were focused on the hack of Equifax, one of the big three credit bureaus. It’s truly huge. Over 143 million people’s records were compromised in the US, Canada, and the United Kingdom between May and July of this year. On Monday, it was disclosed an earlier breach took place in March of this year involving a payroll related service, possibly involving the same intruders.

The data accessed from the most recent breach includes social security numbers, birth dates, addresses, driver’s license numbers, credit card numbers, and other information. This is more than enough to steal the victims’ identities and plague them with false financial issues for years to come. Here’s an outline of steps to take to determine if you’re impacted by this breach and how to plug the hole.

Step 1: If you haven’t already done so, go to www.equifaxsecurity2017.com to determine if you have been potentially compromised. I did this and discovered both Sheri and I were.

Step 2: Enroll in the credit monitoring service. It’s free for one year and worth it. The service also comes with $100,000 of insurance coverage to help defray any cost associated with the theft of your identity. The deadline to enroll in the free credit monitoring service is November 21, so don’t delay.

I suggest everyone at least find out if they have been potentially compromised. It takes a minute to do so and will at least let you know what actions you can take to protect yourself.

Going forward there are several steps you can take to safeguard yourself from any nasty surprises. Here are 5 actions you can take from a Bloomberg article by Simon Dawson.

  • Pull a free credit report every four months from one of the three credit bureaus by visiting www.annualcreditreport.com. This gives you a rolling snapshot of your credit and enables you to spot suspicious activity.
  • Consider a security freeze so no information can be released from your files without your permission.
  • Have a security alert placed on your accounts. This puts a flag on your accounts and shows extra steps are needed to protect your security.
  • Get a fraud alert through each of the credit bureaus which provides real-time alerts if someone tries to open an account in your name.
  • Use your bank’s mobile app and set it up to text alerts to you for any activity and monitor all transactions.

These actions need to become a lifelong practice even if nothing unusual happens with your information during the next 12 months. Identity thieves can use it any time after the free monitoring expires, and I’d believe more such data breaches will occur in the future.

What steps are you taking to protect yourself? Share them with me, along with your questions, comments, and experiences on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

How Your Home Affects Your Home Insurance Rate

Posted by on Sep 18, 2017 in Blog | Comments Off on How Your Home Affects Your Home Insurance Rate

How Your Home Affects Your Home Insurance Rate

Last week we looked at how you, the buyer and homeowner, impact your home insurance rate. The second broad category impacting your home insurance premium is your home itself. There are several factors and none of them include your home’s purchase price, what you could sell it for, nor what the local appraisal district sets the value at. Let’s look at what does count.

Replacement Cost: The replacement cost value is the amount of insurance needed to replace your home in the event of a total loss such as a fire. This is calculated by each carrier’s replacement cost estimator, and includes your home’s square footage, number of stories, number and grade of bathrooms, kitchen grade, floor coverings, siding, roof shape and shingle type, foundation type, number and size of rooms, built-ins, and much more. The amount of coverage needed to replace your home impacts what you pay.

Siding Type: The type of siding your home has impacts both the replacement cost and the insurance rate. For instance, brick siding cost more than wood siding, so a brick home will usually have a higher replacement cost than a home with wood siding. However, since wood is more flammable than brick, a home with wood siding will cost more to insure than a comparable brick home. Fire resistant materials such as stone, concrete fiber boards, and concrete stucco will also have a lower home insurance rate than a wood home.

Roof: There are three ways roofs impact your home insurance rate, its shape, shingle type, and age. A gable roof will have a different rate than a hip, gambrel, Saltbox, tented or other roof style. A home with composition shingles will have a different rate than a home with a tile, slate, or concrete roof, and a hail resistant shingle will cost less than a home with a composition shingle roof.

A roof’s age also impacts the rate. Older roofs have a higher rate than new roofs, and they may also carry a higher wind / hail deductible such as 1.5% or 2% depending on the carrier. Some carriers won’t write a home insurance policy if the roof’s over 15 years old, or they may shift the coverage from replacement cost to actual cash value which pays a claim on a depreciated basis.

Home Age: New and newer homes have a lower home insurance rate than older homes. There are a few carriers who won’t write a home insurance policy on a home over 40 years old.

Location: Where your home is located impacts the rate too. For example, a home in McKinney will have a different rate than a home in Dallas, Fort Worth, Duncanville, or Arlington. This may be due to several factors such as crime rate, recent claim events, or desirability.

Claim Events: Over the last two years, home insurance companies have paid millions in hail related claims across from Justin, TX to McKinney and points east. These claims are having a profound impact on both renewal rates on existing policies, as well as, new policies for home buyers and new construction. Houstonians should prepare for their rates to increase due to Hurricane Harvey next year!

Architectural Style: Do you live in a traditional ranch style home, or is it a French traditional? Or is it a contemporary, loft, Victorian, or Craftsman? What type of architectural style it is impacts the rate as it indicates type of construction materials, window shapes, roof shape, and much more.

These are just a sampling of items which impact your home insurance rate. Other factors include the presence of a swimming pool, foundation type, and historic district to name a few. The key to paying less for your home insurance is to confirm its replacement cost estimate accurately represents these factors and then compare rates between carriers. That’s why I chose to be an independent insurance advisor, to help my clients find the best rates.

What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

How You Impact Your Home Insurance Rate

Posted by on Sep 11, 2017 in Blog | Comments Off on How You Impact Your Home Insurance Rate

How You Impact Your Home Insurance Rate

Most people don’t realize there are many factors which impact their home insurance rate; some are related to the home and some are not. In fact, you may have as much to do with what your home insurance rate is as your home does. There are three broad areas which impact your home insurance rate including you, your home, and the insurance policy itself. This week, we’ll examine four ways how you, the homeowner, impact the rate and examine the other two areas over the next two weeks.

Credit: Your credit, or insurance score as insurance companies refer to it, is one of the major determining factors to how much you’ll pay for home insurance. The better your credit score is, the less you’ll pay. Conversely, if you have a lower credit score you’ll pay more for your home policy.

The reason for this practice in Texas and 46 other states is, insurance companies view credit as a predictor of future claims. The statistical data used to justify this practice shows people with lower or poor credit are more likely to file a claim than people with good or excellent credit. If you want to pay less for your home and car insurance, then improve your credit score. If you’re wondering which three states don’t permit credit to be used as a rating factor, they are California, Hawaii, and Massachusetts.

Marital Status: Are you married or single? Not all home insurance companies use your marital status as a factor to determine your home insurance rate, however many do. If everything else is equal, married homeowners typically pay less than non-married homeowners. The companies which use marital status as a rating factor believe married couples are either more responsible or make a more desirable client as they may need additional policies such as auto and an umbrella.

Education Level: Many home insurance companies provide a better rate for people with college degrees. For instance, if you have a bachelor’s degree, you’ll pay less for home insurance than someone with an associate’s degree. If you have a master’s or doctorate degree, or attended medical or law school, you’ll pay even less for a policy with the companies which use this as a factor.

Occupation: Like education level, there are insurance companies who charge different rates based on what you do for a living. If you’re a manager, director, or executive, you’ll pay less than someone in sales, a trade, receptionist, etc. Other companies offer special discounts or programs for teachers, firemen, or veterans, etc.

These four factors have absolutely nothing to do with your home, so why do they impact your home insurance rate?

  • It may be due to a discount, such as a marketing discount for teachers and firemen or an affinity discount for an alumni or police association or employer.
  • It may be due to a perceived risk level based on occupation or marital status.
  • Or it may be the company is cherry picking their perceived ideal client.

The real question is how does this impact you? Share your thoughts, questions, or suggestions with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group