Factors That Affect Your Insurance Rate

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Claims history. Claims history is a determining factor for setting insurance rates. Historically, the fewer claims you have the lower your insurance rate.

• The Comprehensive Loss Underwriting Exchange (CLUE) Report produced by ChoicePoint. To request a free CLUE Report, call (866) 312-8076.
• The Automobile-Property Loss Underwriting Service (A-PLUS) Report produced by Insurance Services Office Inc. (ISO). To request a free A-PLUS report, call the A-PLUS Consumer Report Request line at (800) 627-3487.

These reports list your personal claims history and the claims history of your home for the previous 5 years. Each insurer decides how to use this information based on its own underwriting and rating criteria.

Under the Fair Credit Reporting Act, you have a right to see and correct information on your claims history reports. If you have been denied insurance or were charged a higher premium, contact ChoicePoint or ISO within 60 days of your denial to request a free report. Otherwise, you will be charged a small fee for your claims history report.

Credit rating. Most insurers also use credit history as a factor to set rates. Studies have shown that individuals who have good financial habits are generally more responsible in other areas of their lives and therefore file fewer claims.

Insurers are interested in how you handle your finances, not whether or not you qualify for credit, so different formulas are used to calculate insurance scores than are used to determine your creditworthiness by a lending institution.

Under the Fair Credit Reporting Act and the Fair And Accurate Credit Transactions (FACT) Act of 2003, you are entitled to a free credit report from any of the three credit reporting agencies if you have been denied credit, are a victim of identity theft, are unemployed or receive welfare benefits. Otherwise, you can request a free credit report annually. These agencies also sell various financial products and services, which you are not required to purchase.

Home maintenance. You can avoid unnecessary and costly claims by inspecting your home, taking preventive action and making necessary repairs. The fewer claims you have, the better risk you are for your insurer. As a result, you will likely be rewarded with lower premiums. See the Home Maintenance section.

Home construction. Because of their resistance to fire, brick and masonry homes usually cost less to insure, unless they are in an earthquake-prone location. In addition to the materials used to build your home, there are other construction factors to consider, including the cost of building materials, labor and any improvements you have made to make your home more resistant to natural disasters likely to occur in your region.

Your location. The location of your home and its likelihood of being damaged by certain natural disasters also can affect your homeowners rate.