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Beyond your kid’s IQ, a woman’s dress size or a guy’s take-home pay, the most important number in your life may be your credit score. The mystical three-digit summation of your credit history decides everything from what kind of apartment you can rent to how much you pay for a Visa card.

But two items pending in Lansing may soon make your credit score off-limits when it comes to setting your car and home insurance rates.

Consumer advocates marched Wednesday from the Michigan Supreme Court to the Michigan House of Representatives Office Building in support of a bill that aims to limit the use of credit and other information in setting insurance rates, and to support an older state insurance regulation that tried to do the same thing but has been tied up in court for five years.

From The Detroit News: http://www.detnews.com/article/20100619/BIZ01/6190310/1001/Bill-aims-to-limit-use-of-credit-scores-by-insurance-firms#ixzz0rP0EmHlH

Now the Senate must decide if it will vote on the bill; a ruling in the court case is expected by the end of August.

Insurers argue that credit and other personal data unrelated to driving records or homeowner claims accurately predict who is most likely to make claims on auto and home insurance.

Taking that into account allows insurers to more accurately assess risk and set rates, they say, and allows insurers to discount rates to customers with better scores.

Opponents counter that such insurance scoring, as the practice is called, results in unfairly high rates for consumers who don’t qualify for the discounts. Studies in other states found the practice discriminates against minorities and low-income consumers.

“In Michigan, we have one of the most onerous of all credit scoring statutes in the country,” says state insurance consumer advocate Melvin “Butch” Hollowell. “Not only do they consider your credit score, but also your level of education and occupation.”

The effect of credit scoring, Hollowell and other critics say, is that at least half of Michigan consumers with good driving records and insurance histories pay more for insurance than they would if their credit, jobs and education weren’t used in calculating their rates.

Introduced in Michigan and other states in the mid-’90s, insurance scoring finds a strong relationship between factors such as how much debt an individual has and how likely he or she is to make a claim, argues Pete Kuhnmuench, executive director of the Insurance Institute of Michigan.

“There are tendencies and correlations,” Kuhnmuench says. “It’s one of the best — if not the best — predictors we have.”

Critics cite discrimination
Critics argue that the parallel relationship between credit woes and insurance claims isn’t proof that bad credit causes drivers and homeowners to have more accidents or make more claims. And even the insurance industry can’t prove any cause and effect, such as people who are careless paying their bills are careless drivers, Kuhnmuench admits.

“The theory is that higher-risk individuals tend to push the envelope more, whether it’s in driving habits or finances,” he says. “We don’t necessarily know the cause but we know the relationship exists. The statistics show us that.”

To critics and consumer advocates, the lack of a demonstrated link between credit and other background factors and insurance claims is flatly unfair. That includes state Rep. Woodrow Stanley, D-Flint, sponsor of H.B. 5634, to bar insurance companies from using credit history, education and occupation in setting insurance rates.

“Until that relationship can be explained convincingly, I reject it out of hand,” Stanley says. “I just don’t think you should be using factors that are not related to a person’s driving performance.”

Stanley finds other considerations even more objectionable.

“How can you say that if a person is a blue-collar worker they get rated one way, and if a person is a white-collar worker they’re rated a different way?” he asks. “That in my view is discrimination. Pure and simple.”

The state insurance office came to the same conclusion in 2004. Backed by Gov. Jennifer Granholm, the Office of Financial and Insurance Regulation issued rules banning insurance scoring for auto and homeowners rates in 2005. Those rules were quickly challenged by the Insurance Institute of Michigan and others who headed to court for an injunction. The matter made its way to the state Supreme Court last year, and a final ruling is expected this summer.

Uphill battle
In the meantime, Stanley hopes to bypass the court ruling with a law that is even stricter. His bill has passed the Democratically controlled state House and is now before the Republican-held state Senate, where Stanley admits it will face an uphill battle.

According to insurance trade publications, more than a dozen states are considering similar bans this year. So far, California, Hawaii and Massachusetts have banned insurance scoring for autos and Maryland bans its use for homeowner insurance.

The insurance industry backs more limited laws that specify how credit information can be used in setting rates, and several states have adopted those measures.

Whether the state Supreme Court or state Senate comes down against insurance scoring may well depend on how the judges and politicians view the economic turmoil that has roiled the state during the recession, notes Butch Hollowell.

“What happens when you get laid off through no fault of your own and your credit scores drops to 650 and your insurance premium goes up?” asks the state insurance consumer advocate. “By it’s very nature it’s arbitrary and capricious.”

From The Detroit News: http://www.detnews.com/article/20100619/BIZ01/6190310/1001/Bill-aims-to-limit-use-of-credit-scores-by-insurance-firms#ixzz0rOzns3Fo

New Blaine auto insurance site @ http://www.blaineautoinsurance.com. It has latest auto and motor cycle updates – like which company has lowered rates in the area and which companies are offering new lines of business. For example: AAA will be offering motorcycle insurance this fall – which will be awesome for bike owners who have AAA now for auto,home, and life – as it will allow all lines to be in one company. It should provide more savings and simplify things. They will be able to have all insurance with one company.

There are also links to http://www.efinancialmn.com for the easiest and fastest life insurance quotes.

We are trying to make getting quotes online easy, fast, safe and hassle free. So check it out and compare your rates or don’t check it out and let your neighbors tell you all about the trip they took this Summer. They probably won’t tell you how they paid for it. All it took them was a few minutes to review their insurance and that they saved so much a trip was in order.

You really should check your rates. We bet you’ll save some money and it will be easy too. Unlike the local casinos – your odds really are good here. So go now and see. http://www.blaineautoinsurance.com Save some money and then come back here and leave a comment so you can help others do the same.

P.S. Go Twins!

http://digg.com/d31QVpF

Once the excitement of buying a new home begins to subside, the reality of protecting that home from the unexpected needs to be addressed. A home is likely to be your biggest investment ever.

Homeowner’s insurance policies are challenging to understand. You can have many different types of coverage within a single policy, and different financial obligations can be set out for the homeowner and the insurer. Here is a basic overview of some of the most important points you need to consider when choosing your coverage.

Types of coverage
You can cover many different insurable incidents and items with your homeowner’s insurance policy. Some of the most common are:

Dwelling: Dwelling covers losses that occur to your home and any structures that are attached to it. Dwelling does not cover fences or sheds.

Other structures: “Other structures” covers those structures on your property that are not attached to your home, like your fence or shed.

Personal possessions: Your furniture, clothing, electronics and heirlooms are all covered by the personal possession section of your homeowner’s insurance policy.

Personal liability: If someone gets hurt in your home or on your property, personal liability coverage can pay for injuries and treatments that exceed your deductible.

Flood: Flood insurance covers damage that results from actual flooding and is generally purchased only by homeowners who live in a flood zone. It is important to remember flood insurance pays only when the flooding of your home is the result of an actual flood. For instance, if your roof were torn off by a hurricane and the inside of your home became flooded, that would not be a claim for your flood insurance to pay. If, however, your local lake overflowed and flooded your neighborhood, it would. In many instances, you may have to purchase flood insurance separately from regular homeowner’s insurance.

Limits
Your homeowner’s insurance policy limits determine the maximum amount the insurance company will pay you in the event of a claim. The lower your limits, the less expensive your policy will be. Of course, if your limits are too low, you may not receive enough from the insurance company to reimburse you for a total loss. When trying to determine appropriate limits for your policy, think about what you would need in order to rebuild your home after a total loss. Then, think about how much of that bill you could afford to pay with your savings. The difference is what you should consider as a limit.

Deductibles
Deductibles are the out-of-pocket expenses that you must pay before your insurance company will begin paying for losses. In order to get money from your homeowner’s insurance policy, your claim (or loss) must exceed the deductible. The larger your deductible, the lower your premium will be because you will be shouldering more of the risk. However, if you cannot afford to pay your deductible, then you could have trouble making yourself whole after a loss.

Life insurance
Life insurance is not offered as part of a homeowner’s insurance policy, so you must buy it separately. Adequate life insurance coverage can help ensure that your family gets to keep their home in the event the unexpected were to happen to you or your spouse.

Term life insurance coverage from a reputable company like SBLI is likely a good option to explore. SBLI offers affordable rates for fixed term and yearly renewable term (YRT) coverage. Fixed term coverage lasts for the term you choose and most often can be purchased for 10, 15, 20, 25 or 30 years. Many people buy it to cover the term of their mortgage. With this type of term insurance, your premium remains fixed for the term you select. Yearly renewable term may be less expensive in the early years of your policy. However, this form of term insurance renews every year and the premium increases each year as well. Visit sbli.com or talk to an insurance representative for a quick quote at (888) GET-SBLI.

Courtesy of ARAcontent

Copyright © 2010 Northwest Herald. All rights reserved.

As the mortgage crisis endures, double digit unemployment, etc., many homeowners have had to make sacrifices to help make ends meet.  Whether it’s trying to get a few extra miles on our vehicles or putting off vacations and retirement, we’re all searching ways to save money. One of the easiest ways for homeowners to save is to analyze your home insurance needs and do a little comparison shopping to see if you can get a better deal elsewhere.

1. Raise Your Homeowners Deductible: Save up to 25%
The lowest hanging fruit for homeowners insurance savings may be to increase your deductible.

According to the Insurance Information Institute (III), if you can afford to raise your deductible from $500 to $1, 000, you may save as much as 25% on your annual premium. Remember, homeowners insurance is not intended for small fix-it claims. Therefore, the benefits of a lower deductible can be quickly dissolved by the higher rates you may experience after making such a claim. As homeowners insurance intended for major perils, consider raising your deductible and collect the savings in the cost of your premium.

2. Multi-line Policy Insurance Discounts: Save up to 15% Purchasing your homeowners insurance and your car insurance from the same insurance carrier could save you up to 15% on both premiums.

3. Additional Security and Safety: Save up to 20%
Have you added new security devices to your home in the last year; perhaps a deadbolt lock, window locks or even and an alarm system? Insurance companies highly value the protection afforded by fire sprinkler systems, burglar alarms, and fire alarms — especially those connected to monitoring agencies such as your local police and fire departments. Accordingly, some carriers will reduce home insurance premiums by as much as 20% if you install some of these features.

4. Discounts for Home Improvements
A new home’s electrical, heating and plumbing systems, and overall structure, are likely to be in better condition than those of an older home. Accordingly, their insurance rates are generally lower as the risk for a potential claim is mitigated. If you have made any home improvement in the past year, you should see if a new policy will reward you with policy discounts.

5. Eliminate Coverage You Don’t Need: Analyze Your Homeowners Limits
Ideally, you want your policy to cover any major purchases or additions to your home, but you shouldn’t spend money for coverage you don’t need. You may have jewelry, appliances, electronics and other valuable possessions that depreciate over time. Consequently, it‘s in your financial best interests to compare the limits of your homeowners policy to the actual value of your possessions at least once every year.

6.  Use an experienced local independent agent for the best leverage.  They will have access to many carriers and will represent the best ones for your area.  Experienced agents will know how to get the discounts and make sure you have the correct coverage.  They will have the best connections and be there for you if need an advocate.

Call me if you have any questions or if you would like additional information.

I help people lower their insurance costs, get better coverage, and show them how to receive hassle free low cost insurance for life.

Tim Peddycoart

763-441- 0291

By Kenneth Harney
Saturday, February 6, 2010

Thinking of cashing out some equity when you refinance your mortgage? Sure, that used to be what millions of homeowners did when they needed extra money.

But now get ready for the post-boom, post-crash trend that’s really hot: Cash-in refis — the complete opposite of cash-outs.

“It almost sounds un-American,” jokes Frank Nothaft, chief economist for mortgage giant Freddie Mac. After all, Americans have grown accustomed over much of the past two decades to tapping into their equity — pulling out a chunk of cash and adding to their debt load — when they refinanced their mortgages. “Almost nobody thought of putting money back in,” he says.

Cash-outs hit their highest level of popularity during the wild appreciation streaks in the early and middle years of the past decade. In mid-2006, just before home values began deflating across the country, the rate of cash-outs hit 88 percent, according to Freddie Mac, which monitors refinancings quarterly.

This meant that nearly nine out of 10 refinancers whose loan files were sampled by Freddie Mac increased the size of their mortgage balance by at least 5 percent. It was the heyday of the pile-on-more-debt mind-set — cash me out, I can’t lose on my real estate — that came crumbling down in 2007 and 2008, when home equity holdings shrank drastically and painfully.

From 2005 to the third quarter of 2009, according to Federal Reserve estimates, American homeowners lost $7 trillion in equity — an unprecedented evaporation of household wealth. Almost nobody was spared.

Now the pendulum in consumer psychology appears to be swinging toward reduction of household debt — whether credit cards or mortgages. In Freddie Mac’s latest quarterly survey of refinancings, 33 percent of homeowners put cash into the deal to lower their mortgage balances, the highest percentage ever. By contrast, only 27 percent of refinancers took cash out — the lowest percentage on record.

Why throw money from savings into your mortgage? Nothaft says a small percentage of refinancers traditionally have preferred to lower their mortgage balances whenever possible — including himself and his wife.

There are at least two key rationales for doing so, Nothaft says. No. 1: If interest rates are low and you’re getting minuscule returns on your bank savings or money-market funds, paying down your home loan might well provide you a better return on your investment
For example, in early 2009, Nothaft and his wife chose to lower their mortgage balance at the same time they were refinancing to 4.75 percent. “We thought, hey, this is a no-brainer,” recalls Nothaft. “We can get a 4.75 percent return instead of close to zero” on checking accounts and bank deposits.

A second reason to consider a cash-in refi would be to qualify for a better interest rate and terms on the replacement mortgage. Say you’ve got a loan-to-value ratio above 80 percent and any refi of the current balance will require payment of private mortgage insurance premiums and possibly come with a higher rate.

But if you have some money that you could devote to lowering the principal balance — cashing in — you might be able to cut your LTV ratio to 75 percent or less, get a more favorable interest rate and avoid mortgage insurance premiums.

Cash-ins, in effect, are a disciplined form of saving — one that in today’s depressed rate environment for competing types of savings might be a heads-up financial management move.

Nothaft said he isn’t sure whether the recent jump in cash-in refis is the start of a long-term societal shift. But there has been a steady rise since the fourth quarter of 2007, when cash-ins hit 9 percent, up from just 5 percent of all refis earlier that year.

By early 2009, they accounted for 13 percent of refinancings and then grew to 18 percent in the third quarter. After that, cash-ins jumped precipitously to 33 percent in the final three months of 2009.

“It may well be a reaction to higher credit standards by lenders” — making cash-outs and refis in general tougher to get — or “some decision on the part of many people to be a little more conservative in uncertain times,” Nothaft says.

A cash-in refi is hardly a remedy for everyone — most people don’t have spare cash available to throw into the pot. But with mortgage rates widely predicted to rise from 5 percent for 30-year fixed rate at present to the mid- to upper 5s as the year progresses, the numbers just might work for you if you have the resources.

Minnesota has its share of current market issues!
Competition for premium dollars during the 1990’s and to present
In the late 1980’s and in the 1990’s Homeowners insurance was a money making proposition for most of the insurance companies in the state of Minnesota. During that period, the combination car-home policy discount was instituted. In additon, the stock market was doing well.

Cash Flow underwriting
The way that insurance companies can invest is very closely controlled by the state. This is so that in the event of a loss in the stock market, an insurance company will not go out of business. However, because even very safe investments were doing very well, many companies kept rates low in order to have dollars to invest. While this was happily accepted by the average homeowner, it did not reflect many of the changes that take place every year, such as inflation and catastrophic losses.

A gradual decline in Homeowner Insurance profitability
Because of this situation, over a period of time, the profitability of Homeowners insurance eroded. Eventually, the entire insurance line began to lose money.

The courts and legislature have broadened covered perils
Minnesota has had traditionally liberal courts and state legislature. Although we can disagree on the pros and cons, again over a period of time, the covered perils in Homeowner insurance polices have been expanded.

When profitability declines, rates must increase
Although many disagree, I do not believe that insurance companies try to overcharge for their product. Companies exist in a very competitive environment and work under complex constraints. Insurance companies, like every other company, are in business to make a profit. When the homeowner insurance line became unprofitable, it was predictabe that rates would be increased. Because the rate of increases were kept artificially low for many years, in many cases homeowners insurance rates have been increased dramatically.

Adverse conditions in the state
When it became more difficult to make a profit, the companies that were the furthest behind the curve in raising rates found it difficult to raise their rates enough. Many of those companies have left the state and their business has been distributed to remaining companies. The remaining companies in turn, are much more serious about charging the correct premium for the structure that is insured, insuring each structure for the proper amount, and making sure that underwriting guidelines are strictly followed.

Large catastrophic losses in the past several years
Catastrophic losses are a fact of life (and of nature). However, in the last several years, Minnesota has seemingly had more than its share of tornados, straight line winds, floods, etc.

9/11
The terrible tragedy of September 11, 2001 will haunt the United States forever. Let us all pray that there will not be additional terrorist events of a similar magnitude. From an insurance standpoint, all companies belong to reinsurance pools and have been called upon to make extraordinary payments to those pools to cover this unanticipated event. This has caused an additional unforseen drag on insurance company profitability.

Conclusion:
The only possible conclusion is that the entire Homeowners insurance market in Minnesota is in difficult straits. The Dormody Agency will continue to make every effort to find its prospects and current clients the best possible coverages at the best possible rate.

www.HomeInsuranceMN.com

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