INSURANCE RATE FACTORS AND COVERAGE REVIEW

Unless you work for an insurance company or are an insurance agent you probably never think about updating your insurance policies. However, reviewing or updating all your insurance policies should be done at least once a year under normal circumstances and more if you’ve had changes in your life. These policies can include your homeowners or renters policy, your auto insurance and your life insurance policies. Not only will annual insurance reviews ensure you have adequate coverage that reflects changing financial or personal circumstances, together we can compare rates to several different companies to guarantee you are getting the best rate possible. If you haven’t already done so, give your agency a call. Now is the time to review and update your policies.

Credit scores and insurance

With incessant commercials stressing the importance of credit scores you probably understand its basic purpose. But did you know that some insurance companies also monitor their clients’ credit scores? Companies’ primary evaluation of potential clients comes from what is known as an insurance score. This number is a calculation based on a person’s insurance loss history correlated with credit report information. Your “riskyness” is based on the history of others with similar statistics. While your credit score is not the sole factor used in setting premiums a low score can have a negative impact.

The original purpose of credit scores was to gauge the likelihood of repaying a loan. However, credit score figures are being consulted in more and more industries which can create a problem for those in the lower range. Three main credit scoring firms—Equifax, Experian and TransUnion and countless Web sites are available for anyone to view their reports. Monitoring one’s score is recommended for all consumers, even those without credit problems.

If you find yourself battling a poor rating, obtaining a report is the first step toward improvement. Having access to the reports lets you find and fix any incorrect information. It also identifies delinquent accounts, debts and late payments. There are several ways to raise one’s score. One of the first steps is to set a spending limit on the credit cards. Paying credit card bills on time and reducing outstanding debt also will boost scores. Canceling cards or opening new ones is not advised as it can negatively affect credit scores. If the debt has become overwhelming consumers can contact their creditors to devise a repayment strategy.

Maintaining a healthy score is crucial for consumers. Using credit irresponsibly costs much more than the total on the bill for your card. Your ability to buy a car, obtain a mortgage or rent an apartment can all be adversely impacted along with insurance premiums.

If you have any questions or concerns on this topic don’t hesitate to contact your professional insurance agent.

Factors for high insurance rates

For most of us, thoughts of insurance aren’t something we like to belabor. Each year, we take a deep breath and pay our premium; we’re dismayed at the cost, but we’re glad it’s over for the year. However, this is not the sort of economy in which we can let any segment of our finances go unexamined.

Insurance rates can seem mysterious and opaque. And, in truth, they are complicated. Insurance isn’t priced like other products because the money each of us pays helps cover the cost of unforeseen future fires, burglaries or accidents. Underwriters, the employees who set rates for insurance companies, essentially try to predict the future. So, where does that leave us when we want to reduce our insurance premiums, trying to predict someone’s predictions of the future?

Fortunately, there are some general guidelines to help get your rates under control.

Auto insurance

• Location. The premium an individual is charged is affected directly by the number and costs incurred by accidents of drivers who live in his or her rating territory and by the number of thefts in that territory.
  
  
  
• Driver classification. Drivers are grouped by age, gender and marital status. Some groups have more frequent and more costly accidents than others. The highest rates usually are assigned to youthful drivers.
  
  
  
• Driving record. Drivers with bad records generally are charged more because statistically they will have more claims than the average driver.
  
  
  
• Use of car. Premium charges generally increase with the total number of miles a car is driven each year. Vehicles driven to and from the job usually are more vulnerable to accidents than cars used only for pleasure purposes.
  
  
  
• Type of car. Some cars cost more to repair or to replace based on factors including ease of repair and the original cost of the car. New cars, for example, are more costly to repair and to replace than are older vehicles.
  
  
  
• Your credit. As strange as it may sound there appears to be a link between credit scores and greater or less than average loss experience.
  
  
  
• Discounts. Most companies offer some standard discounts including: taking a defensive driving course, qualifying as a good student and insuring multiple vehicles. Some insurance carriers have developed their own discounts for such things as buying your homeowners policy from the same company.
  

Homeowners insurance

• Location. Just as with auto insurance homeowners coverage considers factors such as how close is your house to a fire station.
  
  
  
• Build. The least expensive houses to insure are the least flammable. Homes built of materials like brick, stone and concrete have lower rates than homes built of materials like wood.
  
  
  
• Cost. The lower the cost of your home the cheaper the insurance. However, make sure you consider the replacement cost of the dwelling at today’s prices.
  
  
  
• Type. Single family, owner occupied homes cost less to insure than duplexes. Factors such as a home business can drive up the premium.
  
  
  
• Claims history. Whether or not you owned it at the time, insurance companies consider previous claims when they calculate your premium rate.
  

Of course, your professional, independent insurance agent is your best bet to reduce your insurance rate. They’ll compare coverage from a variety of carriers to find you the best deal.

Earthquakes—they can happen anywhere

Who can forget those shocking first TV broadcasts from Haiti? The pancaked buildings, destruction everywhere? Since Haiti we’ve seen more earthquakes occur in Chile, Indonesia, Cuba and other spots around the globe.

Very little of Haiti’s damage will be covered by insurance. Here in the U.S. the result wouldn’t be much different: Standard homeowners policies don’t cover earthquakes.

We shouldn’t think earthquakes only happen elsewhere. The U.S. Geological Survey says quakes pose a significant risk to 75 million including residents of Boston and New York City.

Earthquakes in the east could affect much larger areas than similar quakes out west due to our region’s geology according to the USGS. Moreover, they could cause more destruction because buildings here aren’t designed to withstand earthquakes. While homes aren’t likely to collapse in moderate size earthquakes significant damage is not uncommon resulting in costly repairs.

Quakes are hardly unknown in the New York-New Jersey-Connecticut area. Scientists at Columbia University have data on 383 known earthquakes in the 15,000 square mile area surrounding New York City from 1677 to 2007. That’s almost one a year.

Fortunately, earthquake protection can be purchased separately. Because overall earthquake risk is less in our area coverage is less expensive than out west.

If you would like to discuss earthquake coverage for your home please contact your insurance office.

Your Professional Insurance Agent…
We want you to know about the insurance you’re buying.

Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves as Treasurer on the Board of Directors the PIANY (Professional Insurance Agents Association of NY), serves on the Board of CIBGNY (Council of Insurance Brokers of Greater NY), and was appointed by Governor Paterson to the New York Independent Livery Driver Benefit Fund Board of Directors. His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at: (718) 523-1300 ext. 1082, or visit the website at: www.MemberBrokerage.com