Can Having Bad Credit Affect Your Insurance Quote?

Having bad credit not only penalizes you from getting mobile phone contracts, obtaining a mortgage or getting a great interest rate on a car loan, but it also increases your insurance premium.  Bad credit shows lenders and suppliers that you have a habit of defaulting on payments or bad spending habits, which puts them at risk.  Because of this risk you are often penalized by having to pay higher than normal interest rates or you may be denied financing and funding altogether.  This is no different when obtaining insurance quotes.  Home Insurance, health Insurance and car insurance quotes are all affected by credit risky behavior.

How Insurance Companies Calculate Your Premium
According to CNN Money, how insurance companies calculate your premium has been a long kept secret; however,  90% of home and auto insurance carriers use a score based on your credit report as part of that secret.  It is important to note that the credit score used to determine your premium is not just your traditional score given by the three credit bureaus.  Your credit score along with other information is used to calculate what’s called an insurance credit score.  This insurance credit score determines how much you'll pay per month for your car insurance.  Good driving habits, no accidents and a low amount of claims on your policy can help improve your insurance credit score, which will lower your premium for the next term, should you decide to go with the same insurance company again.

Why Your Credit Score is Taken into Consideration
Businesses use your credit score to determine how likely you are to simply pay your bills on time.  Other companies use your credit score to determine your credit risk and how likely you are to repay monies loaned.  If you have small marks on your credit report such as defaulting on a hospital bill or having libraries fines, this may not give you " bad credit," with an insurance company; however, a credit report that contains bankruptcies, loan defaults or unpaid utility bills will negatively impact your insurance credit score.

Another form of credit which is often overlooked by consumers, but not by lenders or insurers is Chexsystems. Chexsystems is a credit bureau used by banks and other financial institutions to report bounced checks, accounts closed with negative balances, and other charges related to FDIC insured institutes. Chexsystems is referred to as a “bank's blacklist”.  If your name is on this list, you may be denied bank accounts, loans and in some cases insurance.  However, insurance companies understand the need to be insures, so they will often extend insurance albeit with the penalty of having to pay a higher than usual premium.

For more information about an Oklahoma City insurance policy, call an Alexander & Strunk agent today at 800-375-8356.

The Difference between Negligent and Intentional Acts

Liability insurance coverage is designed to protect policyholders from the effect of their negligence but generally offer no protection when a policyholder intentionally causes damage to another. This disparity makes it important that you understand the difference between negligence and intentional harm.

What Is Negligence

When an individual causes harm to another because she did not act with reasonable care, it’s considered negligence. When an individual is negligent, he can be directly responsible for causing harm or damage to another person but it is clear that the damage is not purposeful; it is due to either an oversight, ignorance of a situation, or poor decisions.

What Is an Intentional Act?

Intentional acts that cause harm or damage are those that the perpetrator purposefully creates with the goal of causing damage to another. An intentional act does not have to be a focused attack on a specific individual; in some situations, just knowing about a potential source of danger and deciding to do nothing about it can be perceived as intentional.

Negligence, Intentional Acts and Insurance

Insurance is not generally designed to protect individuals from their preplanned incidents. Instead, insurance is designed to protect against accidental and unexpected damages. Even life insurance, a policy that pays a benefit out after the death of an insured, has some unknowns. Because while every individual knows that eventually he will die, life insurance policies will generally not be issued if you know that your death is imminent due to terminal illness.

Insurance policies do not give policyholders permission to act recklessly with no consequences. It is there to protect the insured from the financial fallout of accidents, unexpected events, and potentially negligent actions. If you have questions about how negligence and intentional activities can affect your insurance policies and payment of benefits, give us a call at Strunk Insurance today. We can discuss the details of your Oklahoma City Insurance policies and help you better understand what may or may not be covered within them.