“Insurance” Archive
Apr
27
Admittedly I recently let my renter’s insurance policy expire. Yes, I know what a foolish mistake that is. I had meant to shop around to see if there were better rates out there but I allowed myself to get overwhelmed with other things. As I started investigating some new apartment possibilities I noticed that many of them required renters insurance so I realized I needed to address this as soon as possible.
I have heard from many folks that Amica provides some fantastic rates as well as great customer service so I decided to give their online quote a try. After entering in some basic info about the amount of coverage, distance from fire hydrant, construction of apartment etc., I was asked for my social security number, which was optional. The site did mention that a more accurate rate would be delivered if I did enter my SS#, however. Clearly Amica uses what is called an “insurance score”. An insurance score is similar to a credit score, but differs in that it heavily weights whether or not you have paid your bills on time and for how long? Unfortunately for me, I have recently fallen behind with 2 of my creditors–part of the reason I have formally launched my mission to get rid of debt–and when the rate came back, it is clear that these late payments are damaging my insurance score, not to my mention my credit score. The rate was nearly double what I had paid a year ago; OUCH!
So why do insurers do use your credit history vis-a-vis your insurance score to determine premiums? The premise is quite simple. The thought is that people who don’t pay their bills on time are higher risk, file more claims and those claims are typically more expensive. The insurers all have quantitative analyses to support this conclusion but some states and consumer advocates feel the practice in unfair. Unfair or not, at least in Washington State, the practice is used and I’m paying for it, at least for now.
