Farah & Farah e-newsletter: Summer 2012
In This Issue
Can a Bad Credit Score Raise Your Auto Insurance Rates or Result in Penalties?
If you’re looking for another reason to have good credit, here it is. Big auto insurance companies are starting to take a person’s financial behavior (i.e. credit history) into account for rates and even penalization. These insurance companies believe that there is a correlation between a bad credit score and the likelihood of an individual filing a claim. Whether you agree with this or not, it’s important to pay attention to your credit score and work on improving it if necessary.
Some insurance experts have even stated that a person’s credit is in the top four, along with where an individual drives, age, and gender, of what insurance companies evaluate when establishing rates. The specifics of what insurance companies look at within your financial history includes collections, delinquencies, pattern of late payments, total debt, and percentage of credit line being used.
As it is, auto insurance giants already evaluate previous accidents, traffic violations, annual vehicle mileage, and the year and make of your vehicle. You don’t need a bad credit score added to the mix. However, if your credit score has resulted in higher auto insurance rates or penalties, your insurance company should notify you and you have the right to inquire.
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Bad Credit History = Higher Car Insurance Rates?
We all know the standard questions when shopping for car insurance. They want to know about previous accidents, previous traffic violations, how many miles you drive a year, what year and what kind of car do you drive. But there are other factors that major auto insurance carriers are now considering: it’s your financial behavior. Nearly all insurance companies now look at your credit report because they feel it’s proven to be a strong indicator on how likely you are to file a claim. Some insurance experts feel that your credit score is one of the top three factors that insurance companies consider in determining your rates, along side the other factors such as where you drive, your age, and gender.
I have always thought that a person’s driving record was the determining factor, but apparently it’s not as important as it used to be. One thing you can do to make sure your credit report is accurate is to monitor it for free at www.annualcreditreport.com The most important factor that car insurance companies use is your payment history such as delinquencies, collections, or pattern of late payments followed by how much you owe including your total debt and what percentage of your credit line are used. Those factors make up 70% of your score. One of the things that is frustrating about these credit scores is that these insurance companies use different credit insurance scores and many of them consider that information proprietary. For example, All State’s credit scores penalizes those accounts that have been more than sixty days late in the past few months, or those that have opened several accounts within the last few years. Progressive penalizes consumers who have fewer than two credit accounts or credit that is fairly new or those who have missed debt payments in the last 18 months.
The bottom line is if your insurance company raises rates or penalizes you because of your credit score they should tell you so that you can get some explanation for the change. Want to learn more about insurance scores? Go to www.insurancescores.com
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Being a Good Samaritan Can Land You in Court
Under Florida Law – When you undertake to provide a service to others whether one does it for free or for payment, the individual that decides to provide the service thereby assumes to act carefully and not to put others at undue risk of harm. A case I find right on point (which really is a lesson to be learned) involved a housing development that maintained a perimeter fence around the housing community. The fence had a gap or hole where a two year old child crawled through it and drowned in the lake that was on the property. The court said that even though the housing community was not required to build the fence and that although they did this voluntarily, they still owed the duty of reasonable care to maintain it. In that particular case the housing development was allowed to be sued for their negligence and failure to maintain the fence. The lesson to be learned here is that when you take it upon yourself to help someone even though you might be doing the right thing morally you can be held legally responsible if your actions cause the person you are helping additional harm.
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Supreme Court Exempts Churches from Discrimination Laws
The U.S. Supreme court has made it pretty clear that churches are exempt from employment discrimination claims because they are protected by the constitution’s freedom of religion provision. A teacher was fired from a religious school in Michigan who claimed she was fired for insubordination. She went on disability leave after being diagnosed with a medical condition and when she sought to reclaim her job several months later, the religious school had told her that her position had been filled. Later, after a further dispute, she was fired and complained to the equal employment opportunity commission which agreed that her firing violated the Americans Disability Act. However, in the Supreme Court ruling religious institutions such as churches are exempt from such act of discrimination laws. Another issue that needs to be decided which the court did not address involves situations when the church employees may not fit within the “ministerial exception” to these discrimination laws, like when the employee may be a football coach and not involved in teaching religious ideas. In this particular case the teacher not only taught math but lead the students in prayers, apparently it was her involvement in the religious side of the school that allowed the church to be exempt from any anti discrimination statues. According to the ruling the church must be “free to choose who will guide it on its way.”
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