Is This Secret Report Affecting Your Home Insurance Rate?

Home insurance rates are approaching record highs this year, with the average premium in the U.S. expected to exceed $2,500, experts say.

That’s after increasing about 20% in the past two years and likely 6% more this year. And as we note in “10 States Seeing the Biggest Spikes in Homeowners Insurance Costs,” some places are seeing even faster growth.

That leaves many people stuck between a home and a hard place — there’s only so much you can do to manage your home insurance rates. But one often overlooked factor is keeping an eye on your credit-based insurance scores.

Why insurance scores matter

Credit-based insurance scores work much like credit scores do. Companies gather data about your financial history, share it with each other, and make decisions based on it — such as whether to offer you service and at what price. They often do this without giving you any advance notice, unless it’s related to employment screening, according to the Consumer Financial Protection Bureau.

Instead, consumers usually learn about this kind of background check after the fact, when they get notice of an “adverse action.” These can include being denied a product or service or being charged a higher price for one.

“Credit-based insurance scores may consider much of the same consumer credit information as financial credit scores, but the insurance-specific models are designed to analyze an individual’s propensity to have a loss,” says LexisNexis Risk Solutions. The global data and analytics company notes that, according to the Insurance Information Institute, those with a lower insurance score are statistically more likely to file a claim.

But as with credit scores, credit-based insurance scores can be based on faulty information. So it’s important to check and make sure they are accurate. Here’s how.

Checking your insurance scores

There are multiple companies that may maintain reports used in your credit-based insurance scores, although it’s important to note that not every consumer reporting company will have information on every consumer.

Two companies to check are:

• LexisNexis C.L.U.E.
• A-PLUS Property by Verisk

You can request a free report online from LexisNexis C.L.U.E. once every 12 months. C.L.U.E. stands for “comprehensive loss underwriting exchange,” and your report may include up to seven years of claims history related to cars and personal property.

You can request a free report from Verisk once every 12 months. Specifically, fill out the “APLUS Property Claims History Report.”

Insurance-based credit reporting falls under the same federal rule umbrella as credit reports — the Fair Credit Reporting Act. That means you can dispute incorrect information in a similar way, and companies have to address it in a similar time frame. You can read about your rights under the FCRA at the Consumer Financial Protection Bureau website.