Did you know that some of the largest companies in the world– like Apple and Microsoft–are in the insurance business?
You probably figure that if you’re a bad driver and collect some fender-benders or speeding tickets in your DMV record, your insurance company is going to charge you accordingly. But what you might not have expected is that insurers also might slap you with penalties — sometimes hefty ones — if you’ve blown off paying a bill here or there.
Car insurance companies in all but three states — California, Hawaii and Massachusetts, where it’s illegal — use a driver’s credit history in the secret sauce of their underwriting formulas. People with bad credit are considered higher-risk customers, so insurers often charge them more, explains Jill Gonzalez, an expert at WalletHub, a personal finance site that just published a study showing what insurance companies in what states penalize drivers the most for poor credit.
WalletHub asked the five biggest car insurance companies in the country for quotes for two imaginary drivers who were identical except that one test case had excellent credit and the other had no credit history.
“There is a strong correlation between one’s credit characteristics and insurance losses,” Gonzalez says. “The insurance companies usually look at the the credit history to see how the insured can manage his or her risk exposure.”
Across the board, the difference between quotes given to the “great credit” versus the “no credit” driver varied by 49%, but some fluctuations were much, much greater.
Credit obviously isn’t the only factor insurers look at to determine premiums, and different companies assign varying degrees of importance to this characteristic. WalletHub’s study finds that Farmers Insurance seems to place the most weight on driver credit data, with a 62% difference between quotes given to WalletHub’s two hypothetical drivers. Even Geico, the insurer WalletHub says “seems to rely on credit data the least,” has a 32% fluctuation between the two driver scenarios.
The results also vary widely by state; in Connecticut, the impact of great credit versus no credit only contributes to a 15% fluctuation in premiums. In Michigan, however, it’s another story: WalletHub finds that credit status contributes to a 115% fluctuation in rates.
Gonzalez says the biggest issue consumers face is that a lot of companies aren’t up-front about their use of credit data in underwriting. “The problem we discovered is that not all of the companies are transparent in letting their customers know that credit scores impact insurance premiums to a significant extent,” she says.
WalletHub looked at the websites of the 10 biggest auto insurers to see how soon, how often and how prominently they advised customers that their credit would be a variable in the eventual premium price they were quoted. It says Progressive is the most transparent, but Gonzalez points out that a lack of transparency among many carriers means that drivers have to do a lot more homework if they have credit problems.
“Consumers with no credit have to do some serious research before deciding on an insurance company,” she says.
When it comes to frying up a feathered feast, there may be no better experts than bearded duckmen Si and Jase Robertson. As members of the Duck Commander family, they know how to be safe when frying a bird. That is why they have teamed up with insurer State Farm® to reinforce the importance of turkey fryer and cooking safety this holiday season with a brand-new video titled Hang on a Minute with Jase and Si Robertson.
The video captures the importance of turkey frying safety in a humorous yet educational way by cautioning viewers to “hang on a minute and think before you fry.” Regardless if the person frying the bird is experienced or a novice, everyone should take appropriate safety precautions prior to frying. Jase and his uncle Si have been frying turkey for years without incident because they recognize the dangers and take the proper safety measures to reduce their risk of a fire.
Cooking fires are the number one cause of home fires and home injuries. Based on data from State Farm, more cooking fires occur on Thanksgiving than any other day of the year. The good news is that State Farm cooking fire claims on Thanksgiving Day have been reduced from 66 claims in 2010 to 29 claims in 2012, the lowest number of claims in a decade.
While the reduction is significant, the fact remains there are still injuries and damage to property as a result of turkey frying or cooking fires each year. November is the number one month for grease and cooking related fire and December is the second highest month.
According to State Farm Insurance claims data, the top states for grease and cooking-related claims on Thanksgiving Day (2005-2012) are:
*Largest increase in State Farm cooking fire claims on Thanksgiving Day from 2011 to 2012 was in Georgia, which jumped from 1 claim to 4 claims|
**Largest decrease in State Farm cooking fire claims on Thanksgiving Day from 2011 to 2012 was in California, which fell from 6 claims to 0 claims|
Most turkey fryer and cooking fires are preventable. Recognizing common mistakes is a critical step in reducing your risk of a fire or potentially fatal burns. Before you break out your bird this holiday season, remember to hang on a minute and do it right.
Cooking Safety Tips
- The leading cause of fires in the kitchen is unattended cooking. It’s important to be alert to prevent cooking fires.
- Have a “kid-free zone” of at least 3 feet around the stove and areas where hot food or drink is prepared or carried.
- Keep anything that can catch fire — oven mitts, wooden utensils, food packaging, towels or curtains — away from your stovetop.
- Keep an extinguisher approved for cooking or grease fire nearby.
Turkey Fryer Safety Tips
- More than one-third of fires involving a fryer start in a garage or patio. Cook outdoors at a safe distance from any buildings or trees and keep the fryer off any wooden structures, such as a deck or patio.
- Avoid a hot oil spill over by first filling the pot with cold oil and then lower the thawed turkey into the pot to determine how much oil should be either added or removed.
- Shut off the fuel source or flame when adding the turkey to the hot oil to prevent a dangerous flare-up if oil does spill over the rim.
- Make sure your turkey is properly thawed before lowering it slowly into the pot.
- Never leave a hot turkey fryer unattended.
- Do not use ice or water to cool down oil or extinguish an oil fire.
- Keep an extinguisher approved for cooking or grease fire nearby.
About State Farm:
State Farm and its affiliates are the largest provider of car insurance in the U.S. and is a leading insurer in Canada. In addition to providing auto insurance quotes, their 18,000 agents and more than 65,000 employees serve 81 million policies and accounts – more than 79 million auto, home, life and health policies in the United States and Canada, and nearly 2 million bank accounts. Commercial auto insurance, along with coverage for renters, business owners, boats and motorcycles, is also available. State Farm Mutual Automobile Insurance Company is the parent of the State Farm family of companies. State Farm is ranked No. 44 on the Fortune 500 list of largest companies.