How Credit Scores Affect Your Home Insurance

Bet you didn’t know your credit score could affect home insurance rates. 

Home insurers are pretty conservative. Act like a risk taker and your credit score may reflect it. And that could make your home insurance rates higher than you expect when you insure a home you buy.

Here’s what home insurance agencies look for when they pull a credit score report on you, and what you can do about it.

Quick Read

Insurance credit score vs credit score

What’s your insurance credit score?

What’s the highest insurance credit score?

Checking credit scores and rates

Are Insurance and Credit Scores the Same Thing?

What is an Insurance credit score, and what does it have to do with your financial credit score? 

The Insurance credit score vs credit score trade off works like this:

  • Your home insurer makes an enquiry about your creditworthiness with a credit bureau like Equifax or TransUnion Canada.
  • They check if you have late or missed payments, and how recently. 
  • They query if you have other debts.
  • Your insurer calculates if you seem to be living within your means or just getting by.

Find licensed insurance companies in Ontario. 

How Financial Credit Scores Are Calculated

Your financial credit score is based on:

  1. How consistently you pay bills on time. 

Multiple late or skipped payments could mean you are struggling financially. That increases the risk you may not pay your home insurer on time. It could also mean you are tardy. Your insurer may have to hire a debt collector, additional expense and headaches for them. 

  1. How many financial enquiries lenders make. 

Are you hunting for a mortgage? Your credit score may go down temporarily, since applying to lenders or a mortgage broker indicates you plan to take on more debt.

  1. Credit card balances. 

Maxing out your credit cards could mean you may be walking a tightrope when interest rates go up. Aim for a credit card balance of 30% of available credit to improve the impression you give.

Spending too little can be damaging too. Avoiding credit cards altogether could leave you without a credit history to show prospective insurers. You want to reassure insurers you can manage money well. 

  1. Time between negative events.

Time heals old financial wounds. How recently you missed a payment makes an immediate impact. A late payment two years ago gets less attention. Satisfying your lender’s home fire insurance requirements. The condo fire insurance binder and other reserve fund questions. 

Calculating your insurance score

What’s Your Insurance Credit Score?

Home insurers can’t deny your application because of a low credit score, but they can increase how much they charge. You also don’t have to consent to having an insurer check your credit score. Prospective insurers must ask your permission before running a credit check, and you can decline if you like. Inventory your home’s contents. 

Your insurer will look beyond your financial credit score, of course. A home’s age and condition, proximity to fire hydrants and fire halls, and whether it has smoke, fire, and carbon dioxide alarms count towards your insurance credit score. Your score reflects:

  • if you live in a high risk area like a floodplain or tornado zone
  • how often you make insurance claims
  • how long it could take emergency services like police to reach your home
  • and your location in a high or low crime area, or somewhere inbetween.

What’s eligible for fire insurance claims in Ontario. Flood insurance in Ontario when buying a property in a flood zone. 

Get the Highest Insurance Credit Score

The most favourable insurance credit scores are for the best customers. So if you want the highest insurance credit score, check your score regularly, get a credit card if you don’t have one, make payments on time, and use credit wisely. 

  • Ask Equifax or TransUnion Canada for a free annual credit score check.
  • Order a digital copy for a fee. 
  • Use Credit Karma or similar services to verify your credit score.

Can a homeowner’s claim for a house fire be denied? What to do if your homeowner’s insurance claim is denied

Asking help from real estate lawyers

Why You Need a Real Estate Lawyer

Buying or selling a home, Axess Law’s licensed real estate lawyers offer suggestions on what to include in the agreement of purchase and sale. Bring your offer to any Axess Law location, or video conference with us remotely, to have it reviewed for clauses that can preserve your right to cancel if a sale is no longer desirable. What’s in the offer to purchase in Ontario. 

We go through the fine print of your offer to purchase, and suggest amendments you may want to make. Axess Law can negotiate with the buyer’s or seller’s lawyer to ask for more time to get favourable mortgage financing, amend your contract, or extend the closing date. Make an amendment to the agreement of purchase and sale. 

Home inspection reports can point out visible defects that can spoil the enjoyment of your  home. We talk to the seller’s lawyer for you. When a home contains asbestos, wildlife or pest infestations, or damaged structural beams, Axess Law negotiates who will make repairs or investigates if you can withdraw your offer without penalty.

Why you need a real estate lawyer?. 

Discharge existing mortgages, and sign the legal papers required to accept a mortgage loan offer with the help of Axess Law. Our experienced legal team contacts your lender to finalize documents they require. 

Your Axess Law real estate lawyer searches title to your property for construction liens or financial claims. We advise you of obstacles to registering the title, and negotiate with seller’s or buyer’s lawyers to get clear title, then hand over the keys to your home. Documents to bring to your Axess Law appointment. 

Affordable Real Estate Lawyers, Anywhere You Are 

Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario  when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it. 

Hiring a real estate lawyer. 

Book a Legal Appointment Today

Dial 647-479-0118 to find real estate lawyers or call our toll free lawyer line, 1-877-402-4207, to meet remotely with virtual lawyers anywhere in Ontario. Make your own appointments using our easy booking form, or stop into any Axess Law location to arrange times convenient for you.