Thursday, 17 December 2015

Car insurance secrets revealed


Car insurance commercials tout low rates but don’t tell you just how the companies set those rates. Consumer Reports’ two-year investigation found that many major insurance companies base prices in part on a hidden credit score that can take into account things like what type of credit card you have or whether you’ve applied for credit recently.
That cheapest car insurance credit score is different from your FICO score, and how it figures into your premiums varies depending on the insurer and your state. Companies use it to predict not whether you’ll be a good driver but whether you’ll file a claim.
Consumer Reports compared rates for hypothetical drivers who are single with clean driving records. In Florida, the average annual premium for those with an excellent car insurance credit score is about $1,400. With just a “good” score, it is more than $1,700, and with a poor score, more than $3,800. That’s a much higher premium than for those with an excellent score and a drunk-driving conviction.
Consumer Reports research shows that some insurers penalize you more for a poor credit score than others. For those drivers in Florida with a poor score, Amica Mutual charges $7,200, but GEICO charges $2,300. So GEICO is a better choice if you have a poor score in Florida.
You can get information for other states here.
California, Massachusetts, and Hawaii prohibit insurers from setting prices based on credit scores. Insurance premiums in those three states are based much more on how people actually drive, which Consumer Reports says is much more fair. But it does mean that if you have an accident in those states, your rates could go up higher than elsewhere.
If you suspect that your car insurance company has given you a low score, ask the major credit bureaus —TransUnion, Experian, and Equifax — for your credit report and correct any inaccuracies. That may help improve the score the insurance companies use. You can get your free credit report at annualcreditreport.com.

[Source: http://wwlp.com/2015/09/01/car-insurance-secrets-revealed/]

2 comments:

  1. Thanks Nishant for sharing this informative blog. it seems very helpful, i was looking for same content about car insurance.

    ReplyDelete