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Tom Wiecek

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The Truth About Credit and Insurance

12-08-08
Tom Wiecek

Recently, the subject of credit has been asked of me by many agents. Apparently, some of you are having problems with your homebuyers not able to get insurance easily because of their credit. And the most common question I get is "What does credit have to do with insurance?"

It may not make sense on the surface, but credit has a lot to do with claims. Studies have shown that the people with lower credit scores have more frequent and expensive claims. People with higher credit have fewer and lower costing claims.

The insurance companies say that it comes down to responsibility. People with higher credit scores are usually safer drivers and more responsible homeowners. They take care of their property and their cars.

For the past ten years, the use of credit has been a growing factor used in underwriting. It was used to determine whether a person would be accepted or not. Today, it is used for rating as well. The higher the score, the lower the premium.

Some companies even offer special programs specifically for the people with higher scores. Of course claims history counts, but if that is clean, they can qualify for incredibly lower rates.

These companies are not the ones you see advertising all the time. Most of these companies only work with independent agents. Since they are very selective, they can afford to offer deep discounts. They don't insure higher risks and they don't advertise. This is the key to lower rates.

Thanks for your referrals and good selling to you!

Tom

PS If you have a home buyer that we can help, call our office at 336-869-3335 or visit www.ncfamilyinsurance.com.

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