Motorcycle Insurance Articles
Saving on Credit Based Insurance Rates
2010-06-08
In North America, credit is life. This is a truism that has been slowly changing over the last decade, but for many industries, the credit scores of its customers and clients still factor into the decision making process. Nowhere is this more apparent than the automotive insurance industry, which seeks to mitigate its potential loss by examining the credit scores of all of those who come looking for coverage. Already one of the most difficult forms of insurance to find, motorcycle insurance, a subset of the general auto insurance industry, can be extremely costly for anyone with a moderate to poor credit score. Even online bike insurance providers may request permission for a credit check before they will provide any motorcycle insurance quotes, and this can sink many riders' chances of a reasonable quote even before the negotiation process has begun.
Although many states are moving to a model in which credit score based insurance policies are not permitted, providers still use this model. By looking at a person's credit history - how many loans they have defaulted on, what kind of debt they are carrying - a company begins to form a picture representing the type of risk their potential insured represents. The higher the risk, the higher the premium, and in some cases, no offer will be made at all. While this method is being slowly phased out, it is worth knowing how best to deal with a company that uses credit scoring as a method for offering motorcycle insurance quotes.
First, make sure your credit is in order. Pay down any outstanding debts, and contact both your bank and credit card company to make sure that there are no defaulted debts you are unaware of. If you have multiple credit cards, consolidate your debt and cancel one of them if possible. In some ways, this application for insurance is much like buying a house. The company wants to know not only that you will be able to pay their monthly cost every month, but that you will not cost them more money in the long run. In mortgage terms, this means that you will not default and leave the property unsellable. In insurance terms, this means that you will not claim excessively and be unable to keep up with your premiums.
For many drivers, perfect credit is an impossibility. Those looking for online bike insurance that do not have a spotless credit record should inquire with the company if they offer experienced driver or other discounts that can help mitigate the cost. Credit scored insurance rates boil down to simply being offered a rate based on your history, and limiting its cost through discounts if necessary.