So starts a series in my blog called The Insure Blur, where I try to explain a few things that clients might not be aware of.
Your Credit Rating can Cost You More on Your Insurance Bill!
A Bad Credit rating can cost you money when it comes time to place your insurance. What does credit have to do with insurance? I don’t intend to comment on whether I agree or disagree with this practice (also referred to as “credit scoring”) , but it is a fact that many (not all) insurance companies take in to account your credit rating when they are determining the price for some of your insurance.
Why?
Many believe that there is evidence that co-relates a person’s worse credit rating with higher risk behaviour from an insurance perspective. That does not mean that they believe every person who has bad credit takes risk, but they claim that the statistics they have prove that as a group, these people tend to have more insurance claims, and therefore should pay more for insurance. The topic is much more complicated than that, but that is the “Coles Notes” version.
Right now there is legislation in place that disallows credit information to be used in the pricing of car insurance, but it is allowed in property insurance (house, renters, etc.). This may change shortly as the Insurance Brokers Association of Ontario (IBAO) is lobbying the government and there currently is a new Ontario private member’s bill to ban the use of credit in all personal insurance products. That being said, right now, your credit history can affect the amount you pay for your property insurance. Did you know that? … or was it a part of the Insure Blur?
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