Home insurance score drastically decreases after car insurance claim?
Credit risk and insurance risk are highly correlated for a single legal party.  Trouble with one could indicate trouble with another. Any increase in credit risk such as new borrowing will be perceived to be an increased likelihood of insurance risk, manifested as a fraudulent or subconsciously induced claim.  Any claim of insurance will be perceived to be an increased likelihood of default, manifested as a default, voluntary or not. To a creditor/insurer, only the law applies; therefore, private arrangements between the borrower/insured and third parties do not factor because the creditor/insurer has no hope of recourse against such third parties in most places around the world. Regardless of whether there is a price ceiling on compensation for damages to assets, limiting an insurers costs, if a risk is realized then it can be presumed through sequential sampling as well as other reliable statistical techniques that future risk has risen.  The aforementioned risk dominoes subsequently fall. Generally speaking, the lower one's financial variance, the lower the financial costs.  In other words, uncertainty can be mostly quantified with variance and other mathematical moments as well.  Any uncertainty is a cost to a producer thus a cost to the consumer.  A consumer who is perfectly predictable with good outcomes will pay much lower costs on average than not, so one who keeps a tight financial ship, not exposing oneself to financial risks and better yet not realizing financial risks, will see less financial variance, thus will enjoy lower costs to financing, which includes insuring.
Auto Insurance score is in no way related to your driving habits, instead it is based on your credit usage.  You are often punished for having more than one or two hard inquires in a year and they also frown upon having many lines of credit even though that helps your credit utilization. As a recent college grad who switched to his own car insurance, many of the things I did myself are reflected here. The #1 thing I did was find out what coverages I had, what coverages some friends of mine had (car enthusiasts mostly - they're the most informed on this stuff), and then figured out what kind of coverages I wanted. From there, I went around getting quotes from anyone and everyone and eventually built out a sizeable spreadsheet that made it obvious which company was going to offer me the best rate at a given coverage level. Something else to remember - not all insurance companies look at past accidents and violations (speeding, etc) the same. In my search, I found some have a 3-year scope on accidents and violations, while others were as much as 5 years. So, if your driving record isn't a shining example (mine isn't perfect), you could potentially save money by considering insurance through a company that will see fewer violations/incidents than another because of the size of their scope. I ended up saving $25/mo by choosing a company that had a 3-year scope, which was on the cusp of when my last violation/incident occurred. Insurance companies will also give out discounts for younger drivers based on GPA average. If you have kids and they maintain a high GPA, you might be able to get a discount there. Not all companies offer it, so if they do it's worth finding out how much it is I believe your statement is mostly correct:  ...all the expert recommendations are based on an inflexible conventional wisdom that presumes that all renters are relatively resource-poor. When you purchase a $50 electronic item at the store and are offered an extended warranty for $3, most people turn it down, not only because they don't think it's worth it, but also because in the event that the item fails between say years 1 and 3, they don't worry enough about that $50 to care if they have to buy a new one, or live without it. The percentage of your net worth also matters. For example, if you had an entire loss tomorrow, you'd be out $20K if you needed to re-purchase your possessions. (30K minus 10K in current coverage.) $20K is approximately 1/44 or 2.3% of your net worth. If a catastrophe occurs and you only lose 2.3% of your net worth, some might consider that lucky, so from that point of view it isn't really a big deal. But on the flip side, if the extra insurance only costs you $50 more per year, you may not even notice that dent in your net worth either. I think for most people, the value of items in their home may be their net worth, or at least a much larger percentage of it, in which case the insurance makes more sense. For someone in your position, it probably doesn't make much difference either way. If you had $300K in valuables in your house, perhaps your point of view would be different. Why doesn't it seem right to you? The lender financed the house and has the first right claim (mortgage) on it, so if you have any insurance proceeds they're first offsetting your debt to the lender. Same as if you were selling the house - first the loan is paid off, whatever is left goes to you. If the property is not lost, then the proceeds are going to you and you keep paying the mortgage. So if a pipe burst and you need to replace the flooring, the insurance will cover it, and you'll get the proceeds. If the building is lost and you're paid the fair market/rebuild value, then you first need to pay off the mortgage. Its standard. "Don't use a ""credit repair"" agency. They are scams. One of the myriad of ways in which they work is by setting you up with a bogus loan, which they will dutifully report you as paying on time. They'll pretend to be a used car dealer or some other credit-based merchant. For a time, this will actually work. This is called ""false reporting."" The problem is, the data clearinghouses are not stupid and eventually realize some hole-in-the-wall ""car dealer"" with no cars on the lot (yes, they do physical inspections as part of the credentialing process, just sometimes they're a little slow about it) is reporting trade lines worth millions of dollars per year. It's a major problem in the industry. But eventually that business loses its fraudulent reporting ability, those trade lines get revoked, and your account gets flagged for a fraud investigation. The repair agency has your money, and you still don't have good credit. Bad news if this all goes down while you're trying to close on a house. You're better off trying to settle your debts (usually for 50%) or declaring bankruptcy altogether. The latter isn't so bad if you're in a stable home, because you won't be able to get an apartment for a while, credit cards or a good deal on auto financing.  ED: I just saw what one agency was charging, and can tell you declaring bankruptcy costs only a few hundred dollars more than the repair agency and is 100% guaranteed to get you predictable results as long as you name all your debts up front and aren't getting reamed by student loans. And considering you can't stomach creditors-- well guess what, now you'll have a lawyer to deal with them for you. Anything you accomplish through an agency will eventually be reversed because it's fraudulent. But through bankruptcy, your credit will start improving within two years, the tradeoff being that you won't be able to get a mortgage (at all) or apartment (easily) during that time-- so find a place to hunker down for a few years before you declare." "I'm really surprised at the answers here. Claims/year per region isn't a statistic that is meaningful here... you need to think about the risk factors and the purpose of the insurance. First, what does title insurance do? It protects you against defects in the deed -- defects that may crop up and mean that your mortgage is no longer valid. This is different from most forms of insurance -- the events that render your title invalid are events that may have happened years, decades or even centuries ago. A big part of the insurance policy and its cost is conducting research to assess the validity of a deed. The whole point of the insurance is to reduce claims by improving data associated with the ""chain of custody"" of the property. So how do you evaluate the risk of finding out about something that happened a long time ago, that nobody appears to know about? IMO, you have to think about risk factors that increase the probability that things were screwed up in the past: You need to have an informed discussion with your attorney and figure out if it makes sense for you. Don't dismiss it out of hand." "Let's face it: most people pay more in insurance premiums than they ""get back"" in claims.  I put ""get back"" in quotes because, with very few exceptions, the money paid out in claims does not go to the insured, but to others, such as doctors and hospitals.  But even if you ignore the question who does the money actually go to, it's a losing proposition for most people. The exceptions are those who have a major loss, greater than what they put in over the years.  But never forget: these are exceptions.  The return on your money, on the average, is only a little better than playing the lottery. The usual counter-argument to the above is, but what if you are one of the exceptions?  I for one refuse to let my life be dictated by worries of unlikely events that might happen.  If you're the sort who obsesses on what could (but probably won't) happen, then maybe you should have insurance.  Just don't tell me I need to do the same. When I lived in California, they had a program where you could deposit $25,000 with the State, and then you could drive, legally, without insurance.  I did this for a while, didn't have any accidents, and exited the system (when I moved out of state) a few years later with more money (interest) than I put in.  You don't accomplish that with insurance. But let's get back to rich people.  Unless you get into an accident with you at fault and the other guy needing a head transplant as a result (joke), you could probably absorb the cost of an accident without blinking an eye.  Those in the upper-middle-class might do well with high-deductible insurance that only pays out if there's an extreme accident. Then again if you have to borrow to buy something expensive (making monthly payments), they will usually demand you buy insurance with it.  This is a way for the lender to protect himself at your expense, and if you refuse, good luck getting a loan somewhere else. I hate the idea of insurance so much I would make an act of insurance punishable by law." I doubt it. If you have a good track record with your car loan, that will count for a lot more than the fact that you don't have it anymore. When you look for a house, your debt load will be lower without the car loan, which may help you get the mortgage you want. Just keep paying your credit card bills on time and your credit rating will improve month by month. "Insurance is bought for peace of mind and to divert disaster.   Diverting disaster is a good/great thing.  If your house burned down, if someone hit your car, or some other devastating event (think medical) happened that required a more allocation than you could afford the series of issues may snowball and cause you to lose a far greater amount of money than the initial incident.  This could be in the form of losing work time, losing a job, having to buy transportation quickly paying a premium, having to incur high rate debt and so on.   For the middle income and lower classes medical, house, and medical insurance certainly falls into these categories.  Also why a lot of states have buyout options on auto insurance (some will let you drive without insurance by proving bonding up to 250K.   Now the other insurance as I have alluded to is for peace of mind mainly.  This is your laptop insurance, vacation insurance and so on.  The premise of these insurances is that no matter what happens you can get back to ""even"" by paying just a little extra.   However what other answers have failed to clarify is the idea of insurance.  It is an agreement that you will pay a company money right now.  And then if a certain set of events happen, you follow their guidelines, they are still in business, they still have the same protocols, and so on that you will get some benefit when something ""disadvantageous"" happens to you.  We buy insurance because we think we can snap our fingers and life will be back to normal.  For bigger things like medical, home, and auto there are more regulations but I could get 1000 comments on people getting screwed over by their insurance companies.  For smaller things, almost all insurance is outsourced to a 3rd party not affiliated legally with a business.  Therefore if the costs are too high they can simply go under, and if the costs are low they continue helping the consumer (that doesn't need help).   So we buy insurance divert catastrophe or because we have fallen for the insurance sales pitch.  And an easy way to get around the sales pitch - as the person selling you the insurance if you can have their name and info and they will be personally liable if the insurance company fails their end of the bargain." "Ok sure, your homeowners insurance now includes all those things. Floods, hurricanes, terrorism... its also now twice the price. You're on /r/finance, not /r/politics. You should understand that you pay a premium for every risk that you off-lay. It is well known that basic homeowners insurance does not cover floods. If you want it, you can get it. Most people in a non flood-prone area will say, ""I'm willing to take that risk, I'll save $500/yr and not get it"". Would you rather the government just force you to get it?  You just complained about Auto Insurance ""forcing"" you to get uninsured driving insurance. You can't have it both ways." "&gt; Let's just say the insurance industry knows a lot more about underwriting than you do.  I'm sorry, but that is a meaningless statement. I work in insurance (first as a consultant, before 'retiring' to work in insurance distribution a few years ago), and I know that our industry frequently uses flawed or outdated methodologies due to the simple fact that insurance companies are very conservative and *very* resistant to change when it comes to changes to their core business. Unless you can show a direct, negative impact on the bottom line caused by the currently used method, you are unlikely to make any changes at all. In this case, if the entire US car insurance industry is using the same flawed system, it won't affect a single company if they also stick to it.   Until 1996, before the current system was introduced, insurance companies in Germany used to rate liability insurance for cars (almost) exclusively by engine power output. The industry had known that this method was fundamentally flawed since at least the late 1980s (comprehensive and partial coverage had been rated by the 'new' system for a few years at this point, which had also taken years to work out), but it took additional years of planning, negotiations and cooperation by the entire industry to change to the new system for liability.   So please, do not ever assume that ""the insurance companies are the experts, they know what they are doing!"". It might very well be the case that they are stuck with flawed/outdated systems simply because there is no sufficiently strong impulse to change what they do.   The current Tesla rate adjustment situation is a wonderful example of this - it apparantly took AAA *5 years* since the Model S first came out to realise that their initial estimate was wrong (it seems unlikely that the accident rate or repair costs have suddenly changed over the last year) and take appropriate actions. By late 2013, there were easily enough Teslas on the road (about 20,000) to get realiable data, yet nothing happened for nearly another 4 years." First you should understand the basics of how insurance companies make money: In a simple scenario, assume 1,000 have car insurance. Assume that on average, 100 people have accidents per year, and that each accident costs $10,000. So, we can expect total costs to be $1,000,000 per year. Some of those costs will be paid by the drivers, who have some sort of 'deductible'. That is - the insurance company will only cover costs after the driver has themself paid some initial amount [something like, the first $1,000 of repairs is paid by the driver]. So now the insurance company expects to have to pay out $900,000 in total claims this year. If they want to pay those claims (and also pay their administrative costs, and earn a profit), they might want to have $1,250,000 in revenue. Across 1,000 people, that would be $1,250 / year in insurance premiums. Of course, the big question for the insurance company is: how much will they really need to pay out in insurance claims each year? The better they can predict that number, the more profitable they can be [because they can charge a much more accurate amount, which can earn them new customers and gives them insurance {pun} that each new customer is actually profitable to them on average]. So the insurance company spends a lot of time and money trying to predict your likelihood of a car accident. They use a lot of metrics to do this. Some might be statistical hogwash that they charge you because they feel they can [if every insurance company charges you extra for driving a 2-door instead of a 4-door, then they all will], and some might be based in reality. So they attempt to correlate all of the items in your list, to see if any of those items indicates that you should be charged more (or less) for your insurance. This is equal parts art and science, and a lot of it comes down to how they market themselves. ie: if an insurance company gives a discount for being in college, is that because college drivers are better drivers, or is it because they want to increase the number of young customers they have, so they can keep those customers for life? Therefore how each metric factors into your calculation will be based on the company using it. It would basically be impossible to 'come up with' the same answer as the insurance company by having the information you provided, because of how heavily dependant that answer is on statistics + marketing. As for how your state matters - some states may have different accident rates, and different payout systems. For example - is Hawaii driving more dangerous because of all the tourists driving rented cars faster than they should? Is New York less expensive to insure because better public health care means less cost is borne by the insurance company in the event of an accident [I have no idea if either of these things are the case, they are purely for hypothetical discussion purposes].  In short, make sure you get quotes from multiple providers, and understand that it isn't just the cost that changes. Check changes in coverage and deductibles as well [ie: if one company charges you $100 / month when everyone else charges $200 / month - make sure that the cheaper company doesn't limit its coverage in ways that matter to you]. There is not necessarily a need to prevent what you describe - 'turning insurance on before high risk situations'. They just need to calculate the premiums accordingly. For example, if an insurance needs to take 50$/year for insuring your house against flood, and a flood happens in average every 10 years, if you just insure the two weeks in the ten years where heavy rain is predicted, you might pay 500$ for the two weeks. The total is the same for the insurance - they get 500$, and you get insurance for the dangerous period. In the contrary; if a flooding (unexpectedly) happens outside your two weeks, they are out. From the home owners view, 500$ for two weeks when heavy rains and floods are expected, and nothing otherwise sounds pretty good, compared to 50$ every year. It is the same of course, but psychology works that way. "Well, that's about 3% higher than the national average, so... I'm not sure if we should be relieved or disturbed.  Personally, I find it deplorable that insurance companies are *allowed* to randomly exclude pesky unprofitable things they don't want to cover.  Floods?  No thanks.  Dental/Vision?  Why *ever* would you consider those ""medical"" issues?  Uninsured drivers?  Yeah, you live in a state that requires 100% of drivers have insurance, but **suck it anyway**, since you have no choice, mwa-hahaha!  And people seriously wonder why I utterly loathe insurance companies.  Insurance ""fraud"" should be viewed not as a crime, but as the moral frickin' high ground; it's *insurance itself* that is little short of fraud-hidden-in-a-6pt-font." "It's not my title. It's the original title. I was pointing out that as a headline, it makes more sense to point out that the businesses are apparently against this regulation. Rather than have the headline be formulated as a tautology, i.e. ""Consumers win after CFPB opens door to thing that benefits consumers""."