I’m hoping there is a fellow Doper who can answer a few questions for me. First off,…I’m VERY upset right now because of something my Homeowners Insurance company did. I’ll explain:
I received notification from my mortgage company that my escrow increased substantially. When I called, they told me that they were double billed by my insurance company last year and this year my insurance went up $593.00 to a total of about $1100.00 per year - yes, that’s right, my insurance was raised over 100%! The Rep for my mortgage company said it looked WAY to high and that there may possibly be a mistake incurred by my insurance company.
I called my insurance company and they told me that no, there was no mistake. They said that they ran a credit report on me in June of 2003 and re-set my homeowners insurance rates based on my credit score! Therefore they billed my mortage comnpany a second time after the credit report was run to collect the difference on the new rate.
So basically they just decided to raise my rates, billed my mortgage company and I am now making up for the increase of 2003 throughout my 2004 escrow. My monthly escrow payment has gone up almost 200.00 per month because of me having to make up for the increase last year plus estimate for payment in 2004.
Here is what I ask: Can they legally run a credit report on me without my consent??
Can they legally base my insurance rates based on my credit score??? I have never, EVER been even 1 day late on a mortgage payment!
Can they raise my rate like this (100+ %) without first sending me notification??
Please help!! I am really mad and I KNOW what they are doing is unethical but is there anything I can do about it??
Note: I am not a lawyer. I am not your lawyer. Even if I was, I wouldn’t be competent to practice in this field of law in your jurisdiction.
However, based on what I do know of this field of law, any company you initiate a business transaction with can pull your credit.
In particular, most banks and insurance companies periodically run the credit reports of most of their customers in order to determine if changed circumstances might result in wise changes in the business treatment of said customers.
Example: I have an American Express card. If Amex were to discover that I had suddenly run up $300,000 in credit charges and accrued 35 collection items, they might decide to end my charging privileges. In fact, as a shareholder, if they didn’t, I’d be mighty upset.
It is perfectly normal for Homeowner’s Insurance costs to fluctuate up or down depending on your credit rating. Insurance companies have determined that low-scoring persons tend to both neglect maintenance and commit insurance fraud more often. They’re also more likely to file a claim in a given loss than are persons with better financial circumstances… some more affluent homeowners will just fix problems out of pocket rather than having increased premiums down the road.
I suggest shopping around for Insurance.
Good luck. That situation would be upsetting were I to encounter it.
Everything you said, Jonathan, although I understand it, seems,…for lack of a better term, Shitty.
I can understand credit checks for credit lines, i.e., credit cards, loans, etc. Bit for insurance? My credit report reflected unresolved judgments tied to a former business that was tied to me (Sole Proprietorship) ‘flopped’. My income is still very decent. My credit cards haven’t lowered my limit. I’ve never had a single claim on my homeowners policy. Never been late on a mortgage.
I just find it very hard to believe that an insurance company can pull a credit report on me and raise my raise without notification.
You may be right - but if you are, it shouldn’t be that way. I should have been notified so I could have the chance to shop around for a less expensice insurance company. Now It’s too late and I’m stuck paying more into my escrow to make up for 2003.
Everything you said, Jonathan, although I understand it, seems,…for lack of a better term, Shitty.
I can understand credit checks for credit lines, i.e., credit cards, loans, etc. But for insurance? My credit report reflected unresolved judgments tied to a former business that was tied to me (Sole Proprietorship) ‘flopped’. My income is still very decent. My credit cards haven’t lowered my limit. I’ve never had a single claim on my homeowners policy. Never been late on a mortgage.
I just find it very hard to believe that an insurance company can pull a credit report on me and raise my raise without notification.
You may be right - but if you are, it shouldn’t be that way. I should have been notified so I could have the chance to shop around for a less expensice insurance company. Now It’s too late and I’m stuck paying more into my escrow to make up for 2003.
Using credit scores to predict possibility of claims is the current hot trend in the insurance industry. I am not yet aware of any states shutting down this avenue for attempting to limit potential risk of the payment of claims.
The insurance company would likely be required by your state to have notified you of any increase in rates. They probably cannot impose an increase retroactively without having notified you of the pending decision to insure you through one of the higher risk companies. I would ask the insurance company for a copy of the notification letter that was sent.
If it was sent to your escrow holder, they likely had a duty to pass the notification along to you in a timely fashion.
Check into what notification was sent and received.
As for shopping for a new insurance company, if I were you, I’d not get my hopes up. In your area, it is likely that most, if not all, of the companies are using the same method for rating risk. You may get quoted a lower rate initially, but after they run the credit check, that will be increased, just as your current company increased its quote. I hope you find a solution.
I can feel your pain. I bought my first house this past summer. I have good credit, have never filed any insurance claim in my life, and was smacked with a $1000 premium, far more that anyone in my homes price range was paying. Most were paying about $500-$600. I called around to several other insurance companies and all came in around about $1000. I couldn’t believe it, but unbeknownst to me there is a thing called an “insurance score” based on a “CLUE” report. I settled on a company and asked them if I could get a copy of the report, which I promptly ordered. I reviewed the report and called my insurance company, they explained that my rates were so high because the previous owners of my house had filed a few home insurance claims. I later found out it was 3 years before I bought the house. I immediately cried foul saying why am I being penalized for claims the previous owners filed. As far as I know the claims were not property related, I believe one claim was for lost jewelry. Long story short, the company said they can’t do anything and nothing was resolved and I’m paying this outrageous rate. Even though this took place last year it still upsets me to think that my insurance rates are based on the claims filed against the house from the previous owners and not something I did.
Fix your credit rating. Get a copy of your report( all companies). “Dispute” every NEG. Even the “valid” ones. Rinse. Repeat with any that stay on that are NOT valid- write tot he originator, threaten them, etc.
Repeat with any that stay on that are NOT valid- write tot he originator, threaten them, etc.