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

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