By Chrissy & Company - Associated Content:
When shopping for auto insurance or homeowner’s insurance, you may have found there is a change in the way business is done. In many insurance companies, the use of credit history has become commonplace. However, with the slowing economy, increasing consumer debt and overwhelming number of individuals falling victim to home foreclosures and other mortgage related crises, there is concern that the use of credit history may adversely affect those seeking to purchase new insurance coverages.
So, what is the underlying basis for using credit history in the realm of insurance underwriting?
In the scope of finance and insurance, it is the underwriting principle that those who carry high credit scores demonstrate financial responsibility and, therefore, demonstrate responsible behavior. This, while true in a relatively normal economy, may not be the case in today’s economy with a potential recession on the horizon.
If you are purchasing insurance coverage, it is important to question the underwriting principles of the insurance carrier that is considering coverage for you. If you find the premium rates quotes are abnormally high for the coverages offered, this may be indicative of the impact your credit history may play on the underwriting process. Read full article.
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