Credit Where It���s Due

I RECENTLY STUMBLED on a way to save a significant sum on my home and auto insurance. While I knew that insurance companies use credit scores in setting premiums, I didn���t know about a policy option that could be turned to our advantage.

Our home, auto and umbrella policies are with Safeco, which is part of Liberty Mutual. I don���t know if this option is available with other insurers, although Liberty Mutual has many subsidiaries and I would guess it may be available with them. If and how credit history can be used in setting premiums also varies by state.

Buried in the pile of documents I receive every year with my policies is an innocuous-looking page titled ���information about your policy.��� It says that Safeco considers my credit history in setting my premiums and that, if I want the insurer to update my credit information, I can mail back the page. It also warns that the review could either raise or lower my premiums.

I never paid much attention to this. I had assumed Safeco was already monitoring my credit history and factoring it into my annual premiums. Also, the language about possibly increasing my premiums gave me pause.

Recently, when I received my annual policies, I called my local agent to grouse about the premium increases. She brought up the credit review forms, asked about my credit score���it hovers around 800���and suggested I send in the forms. She recently had another client who did so and received a premium reduction of several hundred dollars.

I took her advice and mailed in the forms, one for home and one for auto. The option didn���t apply to my umbrella policy. To my happy surprise, a couple of weeks later, I received a 20% reduction on my homeowner���s premium, worth $606, and a 27% cut on my auto premium, or $489, for a total savings of $1,095.

During this process, I had an online chat with a Safeco rep, who explained that the company runs my credit history when the policy is first issued. After that, it���s up to me to request it, which can be done once a year. It dawned on me that I���ve had my Safeco policies for many years, so my credit score must have increased a good bit during that time.

I keep an eye on my credit score with Credit Karma, so I felt comfortable that my score was good before I sent in the forms. Insurance companies use a credit-based insurance score, which is different from a regular credit score, but I figured they were likely similar.

If your insurer offers a credit review, I suggest checking your score right before making the request. Indeed, after paying my now-reduced annual premiums in full using my credit card, I raised my card balance relative to my card���s credit limit���and my credit score dropped 12 points.

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Published on March 20, 2022 00:04
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