How Does Credit Affect Your Insurance?

Credit ScoreA common question I hear from customers is this: “What does my credit have to do with my insurance?” Apparently, quite a bit. In today’s marketplace, it is very difficult to find an insurance company that does not use credit as a strong factor in the pricing of their policy. As a matter of fact, of the 15 insurance companies that we represent, we have exactly one that does not use credit as a pricing factor. Granted, all of the companies use it in varying degrees, but the point is they do in fact use it. I did a random experiment trying to see the actual impact that an insurance score, of which credit is a strong factor, can have on the price of insurance. Please note, this is not a scientific study, but rather, a real life example on how much a price can vary based on a person’s credit.

The two prospects that I used are the same sex and age, have the same marital status, and for purposes of this experiment, have the same address. They both have no tickets or accidents in the past 5 years and have no property claims in the past 3 years. In essence, these two prospects are the identical risk except for their financial history. The first prospect, Bob, has superior credit with little or no debt. He was quoted with the top insurance score for all applicable insurance companies. The second prospect, Jim, has poor credit with high levels of debt. He was quoted with the lowest insurance score for all applicable companies. So what were the results?

Of the companies that I quoted, below was the most drastic difference in price.

Auto Premium – $745 a year
Home Premium – $614 a year

Auto Premium – $1705 a year (129% higher rate than Bob)
Home Premium – $1138 a year (85% higher rate than Bob)

While it may seem outrageous that a company would have such a drastic difference in price based solely on an insurance score, this was not an anomaly. The average difference in price for all companies quoted between their best and worst tier was over 50% for both auto and home. In other words, someone with a poor insurance score can expect to pay 50% more than someone with an excellent insurance score.

What Now?

This experiment illustrates the fact that a person’s credit can have an enormous impact on the cost of insurance, but it also gives consumers a chance to evaluate their own circumstances before looking for quotes. A person with excellent credit needs to make sure they are with an insurance company that weighs its rate heavily on credit or else they are not fully taking advantage of their strong financial history. A person with poor credit needs to find a company that does not use credit as a pricing factor. For those people in between, they need to find a company that uses the right balance of credit to maximize their discounts. Your insurance broker should be able to perform this service for you because searching company to company can be a laborious task. However you do it, just know that your effort could be worth hundreds of dollars a year.

Brian Burns CIC

Compass Insurance Group LLC

303.996.9000 P

Shopping for a Safer Car

Buying a Safe CarIf you’re like most people shopping for a new car, safety ranks high among things you’re looking for. Every new car must meet certain federal safety standards, but that doesn’t mean that all cars are equally safe. There are still important safety differences. Many automakers offer safety features beyond the required federal minimums. The following safety features should be considered when purchasing a car.


These features reduce the risk of death or serious injury when a crash occurs. You can get a rating of crashworthiness from the Insurance Institute for Highway Safety’s website at

Vehicle Structural Design

A good structural design has a strong occupant compartment, known as the safety cage, as well as front and rear ends designed to buckle and bend in a crash to absorb the force of a crash. These crush zones should keep damage away from the safety cage because once the cage starts to collapse, the likelihood of injury increases rapidly.

Vehicle Size and Weight

The laws of physics dictate that larger and heavier cars are safer than lighter and smaller ones. Small cars have twice as many occupant deaths each year as large cars.

Restraint Systems

Seatbelts, air bags and head restraints all work together with a vehicle’s structure to protect people in serious crashes. Lap/shoulder belts hold you in place, reducing the chance you’ll slam into something hard or get ejected from the vehicle.

  • Air bags and lap/shoulder belts together are very effective. The greatest risk of injury from an inflating airbag is if you’re on top of, or very close to, an air bag when it starts to inflate. Choose a car that allows you to reach the gas and brake pedals comfortably without sitting too close to the steering wheel.
  • Side air bags are designed principally to protect your chest. They may also keep your head from hitting interior or intruding structures.
  • Head restraints are required in front seats of all new passenger cars to keep your head from being snapped back and injuring your neck in a rear-end crash. To prevent neck injury, a head restraint has to be directly behind and close to the back of your head. Look for cars that have this type of restraint. If the restraints are adjustable, make sure they can be locked into place.

Anti-Lock Brakes

When you brake hard with conventional brakes, the wheels may lock and cause skidding and a lack of control. Anti-lock brakes pump brakes automatically many times a second to prevent lockup and allow you to keep control of the car. If you were trained to brake gently on slippery roads or pump your brakes to avoid a skid, you may need to learn new habits and use hard, continuous pressure to activate your anti-lock brakes. Anti-lock brakes may help you keep steering control, but they won’t necessarily help you stop more quickly.

Daytime Running Lights

The ignition switch activates these lights. They are typically high-beam headlights at reduced intensity or low-beam lights at full or reduced power. By increasing the contrast between vehicles and their backgrounds, and making the vehicle more visible to oncoming drivers, these lights can prevent daytime accidents.

Source: Insurance Information Institute

Roof Maintenance

Roof MaintenanceThe roof is your home’s first line of defense from the elements. Because of this, your roof gets more abuse than any other section of your home. Regular maintenance can help prevent problems, or identify small problems before they turn into bigger ones.

Here are a few tips that can help keep your roof in top condition:

  • Inspect your roof in the spring and fall. Look for missing, damaged or curling shingles and other signs of wear and tear. Replace damaged or missing shingles.
  • Don’t forget the underside of the roof. Look in the attic for signs of leaks or mold. Make sure your roof is properly ventilated. Don’t worry if your attic is cool in the winter – the cooler temperatures keep heat and moisture from building up, which can cause rotting and buckling. It also prevents ice dams from forming.
  • Keep your roof clear of debris. The debris can damage the shingles and prevent rain water from running off the roof.
  • Clean your gutters and downspouts to allow proper drainage. First clear the gutters of any debris, then flush the downspouts with a hose.
  • Trim any trees that are overhanging the roof.
  • Look for signs of fungus or algae. If your roof is starting to collect moss or algae, install zinc or lead control strips.
  • Check areas with mortar and caulking for signs of wear. Reseal any damaged areas.
  • Inspect metal areas for rust. If there are areas of rust, wire brush the rust then prime and paint the metal.

Taking a few preventative measures can keep your roof in good shape and extend its life.

Insuring to Value: The 100% Solution

Insuring 100 Percent ValueHere’s an important question to consider. If your home was destroyed by fire, or another type of loss covered by your homeowners insurance, would you have enough coverage to rebuild it?

“Insurance to value” is the phrase the insurance industry uses to describe the amount of insurance needed to build a replacement of a home that has been completely destroyed. This value is different than your home’s market value. Replacement value takes into consideration various costs and conditions that probably were not present when your home was originally constructed.

Replacement cost factors

Several factors can impact the cost to rebuild your home, including:

  • Demolition and debris removal – Before construction can begin, the damaged portions of your home must be removed. And sometimes even undamaged portions must be removed to allow other sections to be rebuilt.
  • Increased cost for building materials – When new homes are built, the contractor often has several homes under construction at once, allowing for the purchase of large quantities of materials. Rebuilding projects don’t benefit from this economy of scale.
  • Labor costs – Electricians, plumbers and other construction workers are often assigned by a contractor to work on more than one new home at a time, depending on each home’s stage of construction. This efficient use of labor scheduling is not possible when rebuilding a single home.
  • Changes in building codes – Current building codes for wiring and plumbing must be followed if your home is rebuilt. This may mean updating undamaged portions of your house, as well.

Making sure you’re insured to value

Your agent and Allied Insurance work together to arrive at an accurate replacement value for your home. Allied uses the information you provide about your home, plus construction cost data provided by third-party inspection companies.

We recommend you insure your home to 100 percent of its replacement cost. This qualifies you for Allied’s Dwelling Replacement Cost coverage. The coverage offers extra protection against inflation by extending your homeowner policy’s dwelling coverage (Coverage A) to 125% of your home’s stated replacement value.

Regularly reviewing your homeowners coverage is important to ensure you have enough coverage to rebuild your home in the event of a disaster. This is especially important if you have done any remodeling such as finishing a basement or adding a room. Call or visit your Allied agent if you have any questions about whether your home is fully protected.