Last week, I gave a presentation to a group of people on Home Insurance Frequently Asked Questions. It was a delightful time that spurred even more questions from the audience. This gave me the idea to take some of the points and write a series of posts on them, many of which I write about annually. With that as our guide, let’s look at four factors insurance companies use to determine your annual rate that have nothing to do with your home. They do, however, have everything to do with you!
Credit: At least 45 out of 50 states use a person’s credit rating, or insurance score as it’s referred to, to determine what you’ll pay for home (and car) insurance. Bottom line, the better your credit score, the lower you’ll pay for your home insurance, while those with lower scores will pay more! a
Insurance companies state a person’s credit score is a predictor of future claim activity based on a study at the end of the 1990’s or early 2000’s. While there is a statistical correlation, I believe such correlations can be ascribed to other things including lunar phases, height, and El Nino patterns. I believe this is an unfair practice that is punitive, however it is the world defined by most carriers. If you want to pay less for your home insurance, and many other things, improve your credit score.
Marital Status: Married people typically pay less for car insurance than their non-married counterparts. The same goes for home insurance. The rationale is married people are more responsible, mature, etc. I would not advise anyone get married to pay less for their insurance, but if you are in a serious relationship that has co-mingled your finances, then take advantage of this discount.
Occupation: What you do for a living may impact what you pay for home insurance too. Some companies provide pricing breaks for policemen, firefighters, teachers, or person’s serving on active military duty. Other companies provide a discount because your employer has a relationship with a specific insurance company. And others provide discounts for retired people or attorneys, doctors, architects, and other professionals. Always ask your agent if there’s a discount based on your occupation or affiliation.
Education: Your education matters. Each successive level of education provides a little savings on your home insurance rate. For instance, college graduates pay a lower rate than those with an associates degree, and if you have a master’s degree, you’ll pay lower still.
Not all home insurance companies use these factors or weigh them the same. What’s important is to know that they exist and to find out who provides the best rate based on these factors. Knowing what to ask for may just help you get a better rate! 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!