Insurance Rant

[gonefishie]

So my home insurance renewal package came in the mail and has been sitting for a few days untouched. I got around to opened it today and WHOA what a shocker .
My annual premium went up by about 40% and the insured amount increased about 20%. I can't possibly see how it would costs 250% of my house actual value to rebuild it. The worst part is I have to insured it by what they think is the replacement cost. I can't just insured by the actual value. What a giant sack of crap?
To add salt to the wound, I read on to the part that explained about the credit based insurance score. This is one of the paragraph.
"Why We Use Credit Information
We've found a person's credit history to be an effective indicator in predicting the likelihood of an insurance loss. Please keep in mind that we use credit history in addition to, not instead of, our other characteristics. By considering credit history, we can match likelihood of loss to premium even more precisely, and we think that's good."
I don't think credit history should have anything to do with it? Just because one's credit history is not perfect doesn't mean he going to burn down his own house. By their system, a convicted arsonist with good credit history would gets better insurance rate then me. What the f..hell? This is totally unfair. I wish the insurance industry is more regulated to stop this highway robbery bull craps. I've been paying the premiums all these years without a single claim and they pull this on me. I guess the worst part of it all is that Allstate is better then some of the others.

 

[Gary H NC]

Re: Insurance Rant

What a load of Crap! Makes me mad that these insurance companies can do any dang thing they want!
And credit score should no way in 'ell be a factor.
They do that on auto insurance too..

 

[Bob_VT]

Re: Insurance Rant

If you get your "free credit report" (you can get 1 a year free) you will see the inquiries that hit your credit. The insurance companies have been doing it for years

Yup, I agree that my homeowners has gone up every year too and as tempting as it sounds I would be afraid to research people who have the same insurance and had to use it. I would hate to see if it actually works

Car insurance is a bigger scam. The premiums do not go down as the vehicle gets older and the value depreciates at least with a home the value (used to) increases.

 

[TilliamWe]

Re: Insurance Rant

... I can't possibly see how it would costs 250% of my house actual value to rebuild it. The worst part is I have to insured it by what they think is the replacement cost. I can't just insured by the actual value. ...
We've found a person's credit history to be an effective indicator in predicting the likelihood of an insurance loss...

You haven't looked at new home prices lately have you?

Why can't you insure it at ACV? You have a mortgage on it, don't you?

Credit scoring in relation to claim frequency is true and proven. Sorry you don't like it.

Maybe you need to shop your business around.

 

[TilliamWe]

Re: Insurance Rant

...
Car insurance is a bigger scam. The premiums do not go down as the vehicle gets older and the value depreciates at least with a home the value (used to) increases.

You don't have the right company.

But then again, if you keep getting loses paid that aren't owed, what do you care what the premium is?

 

[kenmyfam]

Re: Insurance Rant

First I have heard about the credit score !!! I don't think they do that in Canada as far as I know.
The 250% value to rebuild has to include include the demolition, dumping, lot preparation, re-servicing and the actual construction. Would it be 250% ??? who knows but it has to be way more than 100%. Are the contents included in that 250% as well.
I think insurance premiums are outrageous as well.

 

[Tail_Gunner]

Re: Insurance Rant

You haven't looked at new home prices lately have you?

Why can't you insure it at ACV? You have a mortgage on it, don't you?

Credit scoring in relation to claim frequency is true and proven. Sorry you don't like it.

Maybe you need to shop your business around.

I am have been involved in credit lending for many years...The facts being used to establish this true and proven are formula is little more than medival medicine...Most credit lenders dont even know how to read a bearu say much less understand one...720 doesnt mean to much anymore.. And thats all the INS companys use is the beacon score. Aside from that less than 50% of the pop has a 750 or better beacon.

As to home priceing... take a 15- 30% hit on values established 3 yrs ago

 

[DECK SWABBER 58]

Re: Insurance Rant

gonefishie, you need to shop around. I have a great independent
agent who writes policies from many different companies.

The rate's can vary greatly from company to company.

And yes, unfortunately they now base premium's on your
credit history.

 

[JB]

Re: Insurance Rant

A little shopping around got me the same coverage for 40% less.

 

[tx1961whaler]

Re: Insurance Rant

The market value of a residential structure has less relation to the rebuild cost than you'd think. For instance, if I had an identical house to my own in a less desirable neighborhood, even adjusting for land pricing, the structure would have a market value maybe half of what it is currently appraised. But it would take the same cost to rebuild it in either case. Plus my house is 50 plus years old. The market value takes the age of the house into account and depreciates the structure value accordingly. The rebuild cost is much higher, as it relates only to the size, construction details, and labor to build a new house equivalent to the old one.

 

[jkust]

Re: Insurance Rant

I was a fan of credit scoring until I moved my Auto insurance to my Homeowners insurance company to get the multi policy discount. My and my wife's credit score's are 830 on an 850 scale and the equivalent for the other two agencies. Literally nearly impossible to get much better this many years along and they sent a note saying our credit was a reason for not being in the premier category. They, insurance company or agent, could not answer my questions as to what they could possibly mean by this. What I can say is my insurance cost hasn't went up materially in many years. The P&C (property & casualty) insurance industry has been in a continued "soft" market cycle for several years now. You should be able to easily bring your renewal back down elsewhere. Doing what is called a rate-on-line calculation in the P&C world based on the coverage limits you get versus what you actually pay to me show insurance is a deal. Credit scoring has gone on for many years and has been a hotly debated topic as it is claimed that it disproportionately affects minorities and people of color.

 

[gonefishie]

Re: Insurance Rant

the coverage limits you get versus what you actually pay to me show insurance is a deal. Credit scoring has gone on for many years and has been a hotly debated topic as it is claimed that it disproportionately affects minorities and people of color.

It might seem to be a deal but how often do they paid you back if ever? Plus, they invest the money and make more on top of what they already make on the take in/pay out margin. It's not fair to based on credit score because they will cancel the policy, stop the coverage if the premium is not paid on time. I can understand if they're obligated to provide coverage but they don't. If you're late, you're done. What really f up is they billed my mortgage escrow account once a year for the whole year. The premium is paid in one lump sump on time and everytime so what credit got to do with it? Does anyone know of any company that would let you buy a policy on what the house ACV? You can insured your leg for a million or whatever you like but how much does it cost to rebuild a human leg?

 

[jkust]

Re: Insurance Rant

It might seem to be a deal but how often do they paid you back if ever? At least on my homeowners I have recouped more than a lifetime of premiums from a storm claim. I was glad to have insurance then.

Plus, they invest the money and make more on top of what they already make on the take in/pay out margin. All business do this and there has been very little rate of return to be had for the past several years especially given the kinds of investments insurers are allowed to hold.

It's not fair to based on credit score because they will cancel the policy, stop the coverage if the premium is not paid on time. These seem like two separate issues. Of course they will stop the coverage if you pay after the contractually agreed to due date. You can't get something for nothing.


I can understand if they're obligated to provide coverage but they don't. They are obligated and you and they sign a contract denoting yours and their obligations. There are obviously gray areas and disputes. Saying they don't provide coverage means they never have provided coverage to anyone ever.

If you're late, you're done. One of the obligations agreed to no suprise.

What really f up is they billed my mortgage escrow account once a year for the whole year. The premium is paid in one lump sump on time and everytime so what credit got to do with it? There is a well documented relationship between those with poor credit ratings and those who make claims. This is not in dispute but what is is the fairness of such a finding as it pertains to the demographic most affected. Life is simply not always fair. My beef here is although I have good credit and I monitor it annually, I know lots of mistakes are made on peoples credit. I think the actual FICO system has some flaws. Not all companies use credit scoring but whether they do or don't they generally use more than one metric to decide your final rate.

Also, you can negotiate the replacement cost to rebuild if they have made an error. Lots of companies will send someone out to verify the insurance amount is correct and not just do it over the phone.

The insurance industry is absolutly highly regulated to the hilt already. You would benefit from a little shopping around here.
]

 

[j_martin]

Re: Insurance Rant

One thing missed in this discussion is that how a person takes care of their finances is a good indicator of how careful he is with other things. If one doesn't give a rip about finances, he is also likely to be careless with caring for the insured property, putting it at a higher risk.

That said, some insurance companies are caught up in the bureaucracy of it all and insensitive to the market. It is, however, competitive, and if you shop, you'll benefit.

my 02
John

 

[tccgold]

Re: Insurance Rant

I agree that I hate credit is used for insurance premiums... what makes me more mad is that it's used for job applications sometimes too.

But anyways, the way I heard, and one that actually makes sense to me, is that people with a lower credit score most likely have less cash (since they probably have missed bill payments). Well, people with less cash are less likely to pay for routine maintenance, which would increase the likelihood that something will go wrong. Especially in auto insurance, if someone hasn't kept up the maintenance on their vehicle, and something catastrophic goes wrong, then it could affect other vehicle owners, possibly including injury and death.

Anyways, that's just what I have heard about credit score vs. insurance premiums, and thought I might add that.

 

[gonefishie]

Re: Insurance Rant

It's not fair to based on credit score because they will cancel the policy, stop the coverage if the premium is not paid on time. These seem like two separate issues. Of course they will stop the coverage if you pay after the contractually agreed to due date. You can't get something for nothing.


I can understand if they're obligated to provide coverage but they don't. They are obligated and you and they sign a contract denoting yours and their obligations. There are obviously gray areas and disputes. Saying they don't provide coverage means they never have provided coverage to anyone ever.

Nah, nah... you got me all wrong here. I guess I worded it wrong too. They're not obligated to cover you until the policy expiration date if they canceled the policy before that date. Therefore, they're not loosing any money so why does one have to paid a higher rate?
What you're saying is that the insurance companies are a bunch of prejudging peoples. Credit score doesn't take circumstances into consideration. It's all about outstanding credits versus available credits and payment punctuality. Let present a hypothetical situation, you're walking down a slippery ramp, fell and broke your leg, fractured your hip. You can't walk, can't work so you got laid off. Now, your finances are in the toilet. Your bills are falling behind and those ugly negative marks start to show up on your credit report. Another situation, the company you worked for went belly up, and you're out of the job. Your bills are behind while you're trying to find work. Credit score doesn't care what the circumstances were. Those negative marks are still there even after you have recovered and caught up on your bills. How could anyone makes judgement about anyone without knowing anything about that person? How dare you to assumed that you can maintain your properties better then someone just because you have better credit score? How do you know if that person didn't have one of those unfortunate scenario above happened to them?
I still don't know why I have to insure the replacement cost instead of ACV. I can't sell it at the rebuild cost so why do I have to insure the rebuild cost? If it gets destroyed, I'd be happy to just get what it worth back. BTW, I've checked around and haven't found one that is any better yet.

 

[roscoe]

Re: Insurance Rant

The whole "replacement value" only deal is something that has really popped up all over the place this year. I got the letter last month.
My uncle got it in August. I know 5 other people that got it, and heard 2 older gents talking at the diner last week.

Don't know why all the ins companies are pumping up the replacement costs, but this seems to be something that is going on all over. I suspect it is caused by a new law or regulation - government !!

Yes, I do believe my $80,000 house would cost $178,000 to rebuild, but I doubt that a total loss would ever happen, where the house, garage, barn, well and septic, would all be totaled. ( well, maybe a tornado)

The replacement value was set at $142,000 about 8 years ago.

The premium did not go up with the latest increase in coverage.

My auto insurance did though.
Coverage remained the same, but due to our state officials legislating some new laws, my auto ins went from $748, to $1106 this year.
By the way, that is for
500k liability,
250k un ins,
250k under ins,
10k med,
250k property damage;
on the Explorer, the Blazer, and full coverage on the Trailblazer.

 

[Navy Jr.]

Re: Insurance Rant

Doesn't replacement value include contents (furniture, appliances, etc), too?

I noticed our replacement value had crept up to an unreasonable level after many years with the same insurance company, so the agent came out to look things over and agreed. The value was reduced to an amount that made more sense.

Years later, when our insurance premium jumped up significantly, I called our independent agent and she did some shopping around. Because of our credit score (it's pretty good), another nationally known insurance company with outstanding ratings offered a policy that cut our premium almost in half. We now have house, both vehicles and the boat covered by them.

It really does pay to shop around. -Ken

 

[dlindeblad]

Re: Insurance Rant

I think the best solution is to call the company up and threaten to terminate your faithfull business if they raise your rates that drastically. This does work some times.

 

[wajajaja02]

Re: Insurance Rant

PROPERTY insurance is regulated at the state level, NJ did not allow the credit score thing until a few years ago, and when they did, geico returned, and others popped up, competition came back , rates dropped, but that seemed only temporary, I'm right back up there on the rates, and they don't use credit scores that I know of. state farm.