Insurance

[Mark Grumpy]

SSt,

go to USAA.com and check it out. I do not think so, but it doesn't hurt to check.



A credit inquiry does not lower your credit score. It merely shows on the report that a check was accomplished. If it did, those of us that receive 5 credit card offers a week would have baaad scores 'cause every one of those companies checks your score before sending the invite. What does lower your score is a high debt to income ratio and missed/late payments. Also, there is a misconception that having a debt and paying it immediately is a good thing - not true. A small debt on a CC with regular payments will do more for your rating as it shows consistency.

 

[Rich Stevens]

To clarify the inquiry issue, there are two types; a hard and a soft. Hard ones hurt and soft ones don't. Hard ones are used to check when you actually apply for something and DO hurt your score. Soft ones are done for account reviews and other reasons and do NOT hurt your score.

For a real education in Credit browse on over to Creditboards.com....

TJR, I must say that I disagree with your comment that people with lower scores should pay more for everything. A tremendous amount of people have found themselves fighting to restore their credit due to medical reasons, divorce, identity theft. They are victims of a system that uses a random number generator to classify you. FICO...!!!

It's a filthy industry full of fraud, from the collection industry scum all the way to the credit bureaus. There are billions of dollars that this industry generate and they DO NOT work for you. If and when you become a victim you will understand.

Now, I'm off of my soapbox.

 

[Tom Schindler]

What I can not figure out is how a credit rating says what type of driver you are. I mean, is someone that has a high credit score a better driver than someone that has a low credit score?



I can understand a loan. Credit score says that a person with a high credit score is more apt to pay back money they borrow than someone that doesn't have a good credit score, but how does that equate to driving?



I guess, some people still think "I got mine, I don't care about you" in one thing, but want to help those same people out in other things. Amazing!







Tom

 

[Rick Kent]

What I can not figure out is how a credit rating says what type of driver you are. I mean, is someone that has a high credit score a better driver than someone that has a low credit score?

There is a very high statistical correlation between credit score and the incident of accidents for people with low scores.



It is almost as high as the correlation between age/sex and the likelihood of an accident. So credit score is a good indicator on the chance of a car accident increasing.



The age/sex one makes sense on an intuitive level. Young males tend to drive fast/agressive and are easily distracted, like to drink and generally exhibit poor judgment when they do.



I am not sure either what the science is behind why people who can't manage their finances crash their cars more often.

 

[Tom Schindler]

Even if it is true, I am not doubting you, let the driving record dictate your insurance cosats.



If those with low credit scores are poor drivers anyway, why check the credit score if they automatically have a bad driving record since they have a low credit score?





Tom

 

[Gavin Allan]

Even if it is true, I am not doubting you, let the driving record dictate your insurance cosats.



If those with low credit scores are poor drivers anyway, why check the credit score if they automatically have a bad driving record since they have a low credit score?





Tom

The reason they use credit scores is that some folks with low credit scores don't have a bad driving record yet, so they use low credit scores as a way to make more money.

 

[Tom Schindler]

So, Gavin, in other words, you are guilty of being a bad driver without actually being a bad driver?



I know it is a scam the insurance companies use to keep us paying more in the long run.





Tom

 

[Gavin Allan]

Yeah, Tom. Just like homeowner's insurance. If your neighborhood is crappy, or your fire department isn't any good, they still charge you more money than everyone else even if you haven't had a claim.



They still raise your rates even though you haven't had a claim in years.



Insurance is a great business--for insurance companies!

 

[user 62851]

I'm with State Farm Insurance and I'm only 27. I have 3 vehicles on my account with them and I believe I'm getting a fairly good price for it. This is what it boils down to:



2004 ST Adrenalin - $490 for 6months - full coverage

1995 Ranger Splash - $175 for 6months - liability

1966 F-100 - $110 for 6months - liability



So per month, I'm forking out about $129. So not to bad in my book for 3 vehicles, and being only 27. Credit rating, I would say, has to be apart of it. I just got my bill for the ST yesterday to renew my insurance on it. Last time, it was $560. This time its $490. But what changed? Well I just paid off a credit card of $4700. I'm pretty sure, when it comes to renew the other 2 vehicles for insurance within the next couple months, there renew price will be highly lowered as well.

 

[Tom Schindler]

I can buy the fact that insurance is higher because you do not have a good fire department. I can accept the fact if you live in an unsafe heighborhood, you would pay more in insurance.



I can accept that if you park your car in an unsafe area you pay higher insurance, BUT if you are a safe driver with bad credit, does that mean you are actually an unsafe driver that has been a safe driver?



When if you are an unsafe driver with good credit?



Does that mean you are actually a safe driver that has been an unsafe driver? :wacko:





Tom

 

[Rick Kent]

What is being missed is the concept of pooling risks.



For whatever reason, people with bad credit statistically have more accidents.



I think we can all agree that young males pay more for insurance than middle aged married women.



When I was 17 I paid a lot for my insurance because I was a young, male, unmarried driver. Statistically I was a bad risk and my premium was calculated on the probabilty of me having an accident even though I had not had any accidents yet.



People who live in bad neighborhoods but have not had a theft or vandalism loss yet still pay more because they live in a bad area.



Houses close to the fire house pay less than houses far away, even if they have not had a fire yet.



It is all about statistics and the likelyhood of having a loss and charging people who fit into certain categories similar premiums.

They still raise your rates even though you haven't had a claim in years.



Insurance is a great business--for insurance companies!

This is a common misconception in the general public. Rate increases are across the board based on loss history in your area. Chargeable losses are targeted at you when you have a loss.



Florida is a great example of rate increases due to loss history. 4 landfall hurricanes in 2005 costing billions of dollars.



The average house is worth around $175k and the average premium on a house is about $600. Sounds like a good value especially after your house burns to the ground or is leveled in a tornado.

 

[Tom Schindler]

It still doesn't make it right and I give credit to the state of Washington for recognizing it.





Tom

 

[Rick Kent]

Life's not fair.

 

[Tom Schindler]

Doesn't matter.



Let me guess, you are an insurance salesman.





Tom

 

[Rick Kent]

Let me guess, you are an insurance salesman.[/quote



Wrong.

 

[Tom Schindler]

OK. I still agree with the state of Washington and wish other states will follow suit.





Tom

 

[Gavin Allan]

I guess if we had a strong faith in God to protect us, we wouldn't waste money buying insurance...

 

[Tom Schindler]

Gavin,



Ha Ha Ha Ha...that was great.





Tom

 

[Thomas Rogers]

Gavin said:

I guess if we had a strong faith in God to protect us, we wouldn't waste money buying insurance...

I recommend you give it a try, Gavin. Drop your auto liability insurance and while doing so claim to the DMV the next time your re-register or the cops when you get pulled over or in an accident that "insurance is against your religion."



It just might work.



It would make for an interesting court case if nothing else.



TJR

 

[Rick Kent]

I guess if we had a strong faith in God to protect us, we wouldn't waste money buying insurance...

On a more serious note, how about all those losses that are categorized as "acts of God".



Is that God showing us he has a sense of humor or testing us to see if we have common sense enough to protect ourselves?