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Your insurance score is used to identify the likelihood and severity of claims. Each score is created from different evaluations of credit report information, but being a good financial credit risk does not necessarily make you a good insurance risk. How is my insurance score used? Insurance scores are not used to decline or cancel your insurance policy, but they are just one of many variables used for underwriting personal property insurance policy renewals (e.g. homeowner’s coverage). What else determines my policy premium? Other variables that have been proven to have a direct relationship to the likelihood and severity of claims include: Location of your property Age of your property Age of the policyholder History of claims What’s the impact of insurance scores? For about 85% of our policyholders, insurance scores either lower their premium or have no impact on it. Why is insurance score information used? They help the insurance companies determine which policyholders with similar characteristics - for example all policyholders that are mortgage-free, claims-free and between 35 and 45 years old - should receive lower premiums because they are at a lower risk of claims. Where does the insurance score come from? Insurance scores are provided by Equifax Canada, a consumer credit reporting and information services company. How does Equifax determine the insurance score? The exact evaluation method used to create the insurance scores is only known by Fair Isaac Corporation (they consider it proprietary). However, the following is known. The criteria is known to be included in an insurance score: Payment history Amounts owed New applications for credit Types of credit in use Length of credit history Mortgage-related inquiries What factors negatively impact my insurance score the most? Insurance scores are negatively impacted the most by these factors: Number of lines of credit and amount of credit available, if not managed properly Number of retail credit cards (such as those issued by a department store), if not managed properly Recent requests for new credit or new credit obligations High ratio of credit use to credit available Public record information including collections and bankruptcies Late payments within the last 24 months How can I improve my insurance score? Insurance scores can be improved over time by using credit more responsibly. Pay bills on time. Delinquent payments and collections negatively impact insurance scores. Pay off any accounts "in collection". These stay on your credit report for seven years, so not paying them impacts the insurance score even following payment. Pay off or keep low balances on credit cards and other "revolving credit." High outstanding debt can negatively affect an insurance score. Open new credit accounts only when needed, and responsibly pay them off on time. This will help improve insurance scores in the long-term. Closing an account doesn’t remove it from a credit report. A closed account will still show up on the credit report and may be considered in the score. Can I find out what my insurance score is? No. Equifax only provides credit report and financial credit score information. They do not disclose insurance scores. However, you can request your credit report from Equifax which contains information your insurance score is based on. To obtain a free copy of your credit report by mail, contact Equifax at 1-800-465-7166 or visit their web site at www.equifax.ca and print off the free credit report request form. For a fee, Equifax also allows you to view your credit report online. Now that you’re aware that you have an insurance score, do everything you can to manage your finances responsibly so that you can minimize the impact upon your insurance premiums. For more information visit www.economicalinsurance.com or talk to your Taylor Group representative if you’re thinking of renewing your homeowners insurance policy. Source: www.economicalinsurance.com |
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