Which Red Flags Do Insurance Companies Look For?

Often, when you have a minor car accident, your first thought after making sure everyone's okay is, "how will this affect my insurance costs?" You have recognized one of the red flags that insurers look for -- claims. Claims, personal factors that may affect your risk for filing claims and even your credit history are all factors insurers consider when setting your premium or offering you coverage.

Claims

• Depending upon the type of insurance, claims may send up a red flag to existing or potential insurers that you are an insurance risk. Multiple accident, theft or comprehensive claims are an auto insurer's sign that you may be too much of a risk to insure. A number of theft, accident, or claims for damage caused by home appliances may make a home insurer think twice about writing insurance for you or keeping you on as an existing client.

  For health insurers, expensive claims for ongoing illnesses or conditions may prompt premium increases or other fee increases; if you are shopping for individual health insurance, you may find that these pre-existing conditions will render you uninsurable.

Personal Factors

• Sometimes, it's not claims that make insurers leery of you, but your own behaviors. Health and life insurers will be wary of smokers -- they may insure smokers, but expect to pay more for the privilege, as insurers often see smokers as an expensive risk. Other factors, such as being a woman of childbearing age, having diabetes or other chronic conditions, or being a senior citizen can also affect rates and coverage offers.

  If you have a history of speeding tickets, DUIs, have an underage driver in your household, or just live in an area where personal injury claims for car accidents are high, auto insurers may refuse to cover you altogether, or make you pay dearly for coverage.

  When it comes to home insurance, your lifestyle may raise red flags. Large dog lovers or those who keep breeds that are known for aggressive behavior may find home insurers reluctant to write policies. Likewise those with swimming pools. Living in a neighborhood where crime is a problem and claims are high will also make home insurers wary of offering or maintaining coverage.

Credit History

• Insurers are adding another factor to your insurance-worthiness -- your credit history. Those with a poor credit score or credit histories that show a pattern of late payments or charge-offs may find that insurers are reluctant to offer coverage without pre-payment, may charge higher premiums, or may not offer coverage at all. "Many home and car insurance companies use your credit information, filtered through a formula to create an 'insurance risk score,' to determine how likely you are to file an insurance claim," reports Insure.com. "Your premium bill could rise if you have a bad credit score, even if you haven't filed a claim." While this practice is currently in use mostly by car and home insurers, those who are in the market for individual health insurance may find that their credit score can also affect their likelihood of getting affordable coverage.