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Help Your College Student Get Ahead

Some advice for parents wanting to help out their college age kids (and even high school seniors):  Help them get a good credit record.

Today, a person's credit record can have a big impact on a lot of different things.  Everyone knows that a good credit record can help you get loans or a lower rate on a mortgage.

But another big benefit to a good credit record is discount on your insurance.  For example, we have carriers that give very significant discounts for superior credit records.  You can help out your child that is in college, or a high school graduate or high school senior by helping them establish credit and get a good credit record.  Here's one way.

- Help them get a small limit credit card with their name on it.  Don't just make them a signer on your credit card; but have them actually "be on the hook" as well.

- Once they have a credit card, MAKE SURE IT IS PAID ONTIME EVERY MONTH.  The whole thing can backfire on you if your child gets a credit card and then doesn't pay on a perfectly timely basis.  If that happens, it will create a BAD credit record and do more harm than good.

- There are several banks that offer credit cards designed for students.  You can go online and check them out.  Among others, some offering student cards include Disover, Capital One, Bank of America, and Citi. 

- Because you child probably does not have any credit yet, it may be difficult for he or she to get approved.  Thus, you may need to co-sign the agreement with your child in order to get approved.

- Often times, the college may have an associated credit union.  Sometimes approval may be easier going through one of those entities.

Of course, I must emphasize again the importance of making sure payments are kept up and made ON TIME.  Pay the ENTIRE BALANCE off on the card every single month.  Set it up on automatic payment from your checking account and them make sure you have enough money in your checking account for the payment each month.

Setting this up and being careful to pay it off each month will help your child get a good start!

One final note: If YOU have a good credit record, be sure to have us quote your home, auto and other insurance.  Take advantage of our huge discounts!

Credit Based Scoring And Insurance

Insurance companies use different sources of information about a person that supplements an application. For auto coverage, motor vehicle reports are ordered. For home coverage, physical inspections may be needed. Another tool that is widely used for underwriting is credit-based scoring. While once controversial, this method has gained public acceptance. Its origin lies in the commercial use of credit histories.

Banks and other lenders have long used credit history in their lending process. A discovery then occurred which prompted a new use. For some reason, certain elements of a person’s credit history are predictive of whether that person is likely to suffer insurance claims. A credit-based score is developed from information such as amount of debt, number of credit cards held, pattern of payments, defaults, etc. Credit-based scores are used to help decide the acceptability of applicants. They may also help a company choose to modify the premium charged to existing clients.

Insurers, after battles with regulators and consumers regarding the use of such information, routinely use credit-based scoring. It is hailed as an aide to improve their pricing and profitability. However, there is a reluctance to provide details on how scores are developed. Companies have claimed that the information is considered confidential. Insurers fear that revealing details on credit-based scores would result in losing valuable information to competitors. While a handful of states have banned the use of credit-based scoring, most others have approved its use (along with guidelines for its use).

If you have been affected by a credit-based score, you’re entitled to know. You can also get information on how to be sure that your credit history is accurate. An insurance professional is a good source to help you with questions on how your credit may be affecting your insurability.

Insurance, War and Terrorism

Terrorism and military activity continues to be a major concern to us all; even affecting the, normally, mundane world of insurance. It would be natural for you to wonder about items such as:

  • How do the events affect my insurance protection?
  • Are war and terrorist acts the same?
  • Exactly what is excluded by my policies?
  • Do I have to buy special coverage to protect my belongings?

It is understandable to be concerned and confused over the above issues, especially since everyone is being inundated with news and advice.

Personal lines insurance (any coverage that protects personal rather than business property) is more standardized than commercial insurance. Because of this higher level of standardization, the coverage approaches used in policies for cars, homes, and personal liability are similar.

Most policies prohibit coverage for causes of loss that are considered "uninsurable." Not surprisingly, coverage for war is one cause of loss that is excluded. Typically, auto and homeowner policy wording not only excludes war, but any military actions similar to war such as rebellions, large-scale civil disturbances, and revolutions. Further, coverage is excluded regardless whether the government has formally declared a state of war. On the other hand, acts of terrorism are distinct from war and, as we have learned to our sorrow, involve individuals committing acts against other individuals rather than against governments or military personnel. At one time, losses caused by such acts were covered, but that was when their likelihood of occurring was rare. Since the danger of terrorist acts has risen, more policies have begun to exclude this cause of loss. However, it is always in your best interest to look at exactly what is stated in your policies. It would also be helpful to contact an insurance professional to discuss any of your concerns in enough detail so that you understand your situation and your coverage needs.

Did I Notify My Insurer?

An insurance policy is a promise to protect you against certain types of loss, but it can't follow-through unless it knows about a loss. Prompt notification is so important that it is a formal policy requirement. A policyholder that fails to meet this obligation could result in a claim being denied.

A policy typically requires you to do the following:

Contact the agent or insurer as quickly as practical - the practical requirement replaced the previous use of "possible," since some companies unreasonably denied coverage because notification was not instantaneous. The difference between words is important. It allows some flexibility for dealing with circumstances that could affect how quickly you contact your agent or insurer about a loss.

Identify yourself - Perhaps one day your insurer will be able to recognize your voice over the phone and immediately pull up your file. Until then, be prepared to at least tell your insurer your full name (or, if different, the name the insurance policy is under) and the policy number.

Give adequate details - What, When Where, Why and How. It is important that the insurer has enough information to take proper action. This information allows an insurer to open a claim file, assign the loss to a claims person and begin investigation of your loss.

Provide copies of loss-related materials to the insurer - You should not guess about whether a legal notice or request to be paid for damages is important, even when an actual lawsuit has yet to be filed. Send a copy of the information to your insurer and let them decide.

Prompt notification helps everyone

Complete and quick communication about losses gives you the best chance to get needed coverage and gives your insurer an opportunity to handle a possible claim efficiently. It also allows the insurer to control issues that could let lawsuits gets out of control, such as the ability to offer payment for medical expenses or to contact and question witnesses.

Don't hesitate! Contact your agent or insurer and get your loss handled.