Over-insured on house

[TheBajan]

When we built our house in 2003, we had to insure it for i'ts full cost/loan amount which was $420K. For the first few years, we made double payments intending to have it paid off by 2014. During that time we paid down the principal to $278K. This was the combined balance of the first and second mortgages. Then the economy fell apart. We filed BK on Feb 9th and the second was stripped away so we now owe $213 on the first. We are still insured at $420K on a loan of $213K. We could save perhaps $30 a month if we go to our agent and have them adjust our homeowners policy but here's my question....

Since we filed BK13, I'm afraid that if they have cause to run a credit check, they will raise our rates on everything. Is that true? We've been with the same company (State Farm) for over 20 years and a part of me feels like it's not worth the risk. Does anyone have experience with this?
Thanks much,
The Bajan

[Flamingo]

You need to contact your insurance agent to go over all this because they are the only ones that could make any necessary adjustments. Most states do not allow credit profiling for insurance purposes - you can search online to see if your state allows the practice or contact your state Department of Insurance and see if your state allows credit profiling. If they still do, yes your house, vehicle and other insurance rates can rise due to filing BK. Best of luck to you.

[TheBajan]

You need to contact your insurance agent to go over all this because they are the only ones that could make any necessary adjustments. Most states do not allow credit profiling for insurance purposes - you can search online to see if your state allows the practice or contact your state Department of Insurance and see if your state allows credit profiling. If they still do, yes your house, vehicle and other insurance rates can rise due to filing BK. Best of luck to you.

Thank you. Our state does allow. A year or two ago my son and his wife had their insurance raised due to a random check from their company who explained that their FICO score no longer met the criteria for low risk. That's why I'm concerned about it.

[keepsmiling]

How does my credit history affect my home insurance and car insurance rates?
By Insurance.com
Posted : 01/01/2011
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[Compare car insurance quotes now.]
Insurance companies in most states consider your credit history as a factor in setting home and car insurance rates. If you have good credit, you're more likely to get affordable home or car insurance quotes than someone with poor credit.

While lenders consider credit history to gauge the likelihood customers will repay loans, insurance companies use the information to help predict whether customers will file costly car or home insurance claims. (Credit history is not used to determine health insurance or life insurance rates.) Insurers, who have used credit-based insurance scoring since the 1990s, say there's a relationship between credit history and claims. Theoretically, customers with poor credit are more likely to file home or car insurance claims than those with good credit.

The practice is controversial. A few states prohibit insurance companies from using credit scoring for certain types of insurance. Massachusetts, Hawaii and California don't allow credit-based scoring for car insurance, and Maryland has banned the practice for home insurance. Michigan also banned credit scoring for personal insurance lines, but the Michigan Supreme Court lifted the ban after insurance companies sued.

Maintaining good credit will help you qualify for better home and car insurance rates if you live in a state where insurance companies are allowed to use credit-based risk scoring. Get free copies of your credit reports each year from Annualcreditreport.com to make sure they're accurate. Follow instructions to correct any factual errors.

To improve your credit, pay bills on time, catch up on any late payments and keep credit card balances below 30 percent of credit limits.

For more, see "My credit affects my auto insurance rate?"


Good ol' Michigan Gotta love it.

[df04527]

We also had the same issue of over insurance - after all the prices fell - we were still insured at replacement cost -- talked to insurance company and they would not lower it! So we found a new insurance company and now it's insured for what it REALLY would cost to replace it now. Keep in mind it doesn't necessarily go by the mortgage balance.

[TheBajan]

Thanks all for your input. I think we will just leave it alone. Replacement cost is certainly higher than our current balance.
Cheers!

[tammygirl1]

We just this week moved our Home Insurance over to the company we have auto insurance. I was Worried we may get denied or get a higher quote but it didn't happen. We are in CA. Good news is that we got a 20% discount on our auto now! Yeah!! For us, that's an $800 discount a year which helps since my hubby is still out of work.