When Dave Frederick’s home insurance premium came up for renewal, he got a nasty surprise. The new rate on his Blenheim, Ont., home almost doubled, so he set out to find out why.
You might be surprised by what he discovered.
Like many Canadians, Frederick lost his job in the recession. He’s recently had to declare bankruptcy, but has managed to hold onto his house. He says he’s never missed an insurance payment.
When he asked his insurance company why his rate hike was so high, they told him they now factor in your credit score when determining your premium.
Plenty of Canadian insurance companies have started using credit scores to help set your rates, saying the lower your score, the more likely you are to make claims. Just say you lose your job — you might hold off on fixing your roof.
There’s a bad storm, and your roof leaks. You’re more likely to make a claim.
Frederick says it doesn’t make sense.
“I’m not going to start making claims because I’m unemployed. I mean, it makes me no money.”
It doesn’t make sense to most people. A Marketplace poll conducted by Vision Critical found 87 per cent of Canadians don’t think insurance companies should be using credit scores. About the same number polled didn’t know insurance companies were checking them out.
So, are you paying higher rates because of your credit score? Here are few things to check:
• Check your insurance rates. Have they jumped recently? If so, your credit score could be the reason.
• You can check your credit scores with companies such as Equifax or TransUnion. If your score seems low, ask why. The agency might be able to suggest ways of improving it.
• Ask your insurance company if it uses your credit score as a factor in determining your rate. Not all companies do, so if you’re not happy with the practice, shop around.
– Wendy Mesley is a co-host of Marketplace, which airs each Friday at 8:30 p.m. on CBC Television.
