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Exploring some of the odd factors considered by insurers

Thu Apr 28th, 2016 on     Insurance Claims,    

Most of us are well aware that insurance companies will consider a multitude of factors when determining premiums for everything from homeowners’ policies to auto policies. Furthermore, most of us are well aware that these factors taken can range from the obvious to the obscure.

In today’s post, we’ll take a closer look at some of the factors that, unbeknownst to you, the insurance companies are taking into account when calculating premiums for home, auto and even health insurance. 

What’s your credit score?

Most people are completely taken aback to learn that their insurance company will actually look at their credit score when calculating premiums. This makes sense when you stop to consider 1) how personally invasive it seems, 2) how little good could come from it and 3) how this type of information could be used against people with lower incomes.

Regarding the first two points, the reality is that most policyholders likely consented to this practice somewhere in the boilerplate of their policies and that consideration of credit scores can sometimes result in lower premiums.

As for the last point, state governments are becomingly increasing aware of this possibility. Indeed, both California and Massachusetts have passed laws banning consideration of credit scores for auto insurance.

Are you married?

Somewhat curiously, insurance companies have determined that married individuals are generally safer drivers than their single counterparts and therefore entitled to a discount on their auto insurance premiums. What may come as a surprise, however, is to learn that if a person divorces or loses their spouse, they will incur what is known as the “widow penalty,” meaning their rates will tick upward.

How much do you smoke?

While it’s no secret that the revelation you are a smoker will lead to higher health insurance premiums, most people are unaware of how the insurance companies determine who can be classified as a smoker.

The reality is that many follow the rigid definition set forth by the U.S. Department of Health and Human Services, which classifies a smoker as anyone who uses tobacco products an average of four-plus times per week within a timeframe no longer than six months.

In light of this reality, experts advise people to make sure they inform their health insurance company if they have quit smoking within these parameters, as it may help reduce their premiums.

It’s important to remember that even if you are diligent about paying your premiums, there’s always a chance the insurance company will delay or deny payment on a claim. If this happens, please consider speaking with an experienced legal professional as soon as possible.  

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