Insurance Quotes  >  Home Owners Insurance  > Idaho

Credit and Home insurance rates in Idaho

Regulations governing the homeowner’s insurance policies are the same in most states of America. So are the standard policy types and the additional covers you may purchase to substantiate your home insurance. However, one issue that is fast gaining ground in Idaho among other states is that of credit as a factor for obtaining insurance.

Of late the number of personal auto and homeowner's insurance companies looking at consumer credit information to decide whether to issue or renew policies, or to decide what premiums to charge for those policies, has been gradually growing.

If you are looking around for a homeowner's insurance or if your current policy is coming up for renewal, the chances of the company scrutinizing your credit history is remarkably high.

Credit rating and insurance: What you did not know

1. It is legal for an insurance company to obtain information about your credit history. The Fair Credit Reporting Act (FCRA) empowers them to receive general credit information that does not identify your relationship or experience with a particular creditor without your permission. Insurance companies must also adhere to Idaho state insurance laws when using credit information in the underwriting and rating process.
2. Many insurance companies establish a direct link between financial stability and losses. As a group, consumers who are financially responsible have fewer and less costly losses and, therefore, should pay less for their insurance.
3. Insurers maintain that there is no difference in credit scoring among different income levels since there are financially responsible consumers even among the low-income groups. There are companies that declare that factors such as income, gender, marital status, religion, nationality, age, and location of property are not used in their credit scoring models.
4. Most companies look at what is termed a "credit score". This is also known as an "insurance score." It is basically a snapshot of your credit at one point in time. This is put through a credit scoring model that weighs different factors and summarizes your credit information into a three-digit number ranging from 000 to 999. The higher the number, the more financially responsible the consumer.
5. Credit information is used in 2 ways:
   • Underwriting – where the company decides whether to issue you a new policy or to renew your existing policy. Effective January 1, 2003, Idaho law prohibits insurers from refusing to issue you a new policy or from non-renewing your existing policy based primarily on information obtained from your credit report.
   • Rating – where the company decides what price to charge you for your insurance, either by placing you into a specific rating "tier" or level or by placing you into a specific company within their group of companies. The new law also prohibits insurers from charging a higher premium than would otherwise be charged based primarily on your credit information.
6. You know your credit history may be scrutinized if you are asked for your Social Security number to obtain "consumer information," "background information," or an "insurance bureau/credit score." When you submit an application for insurance you should get this issue clarified: whether and how credit information will be used in the underwriting and rating processes.
7. Having no credit history can also affect your chances of obtaining insurance. This may happen only in a few cases where there are "no hits" or "no score," that is absence of a meaningful credit history for you. This may be because you have never used credit but paid in cash, or if you have recently become widowed or single and all of your previous credit information was in your spouse's name among other circumstances. This may lead to higher premiums which may not be the highest rate nor will it be the best rate.
8. There are some major negatives, which can impede your search for an insurance policy: bankruptcy, collections, foreclosures, liens, charge-offs, etc. Past payment history, number and frequency of late payments; days elapsed between due date and late payment date, Length of credit history, amount of time you have been in the credit system, Home ownership - whether you own or rent, Inquiries for credit - number of times you have recently applied for new accounts, including mortgage loans, utility accounts, credit card accounts, etc, Outstanding debt - how much you owe compared to how much credit is available to you. Make sure these are in order before proceeding.
9. Have a "good" score. Though the meaning of the term varies among companies it can be assumed that a good score is a number that matches the level of risk your insurance company is willing to accept for a particular premium that is given to you.

The three national credit bureaus are:
Equifax (www.credit.equifax.com or 800-685-1111);
Experian (www.experian.com or 888-397-3742); and
Trans Union (www.transunion.com 800-888-4213).

For more information, you can get in touch with your insurance producer or company if they have educational material about their use of credit.

Search the Internet, but be sure the information you access deals specifically with use of credit by insurance companies.

Contact the Federal Trade Commission for information about the FCRA or its consumer brochures on credit by calling toll free at (877) 382-4357 or visiting its website at www.ftc.gov

Contact the Department of Insurance by calling our Consumer Assistance Hotline toll free at (800) 721-3272 or visiting our website at www.doi.state.id.us