Montana Homeowners Insurance

Last Updated on September 29, 2020 by Andrew Lee

A lot of Montana consumers know that their homeowners insurance policy provide them with coverage in the event that their house sustains damage or loss through a covered peril or event. However, this particular type of insurance benefits them more than just that.

Montana homeowners insurance plays so many significant roles in the lives of consumers, as it can actually eliminate the need for out of pocket expenses. You should know though that there are many things that can have a bearing on the associated premiums, one of the biggest of which is a policy holder’s credit score.

Credit scoring and the basics you should know about it

At its core, credit scoring is the process of recording your credit at a given time. A mathematical formula, called the credit scoring model, uses this recorded number as a variable and calculates it together with several other factors. The goal is to summarize your credit information into a number that can range anywhere from 0 to 999.

In the insurance market, this number can represent the likelihood of a consumer filing a claim. Thus, insurance companies believe that the higher the credit score of policyholders is, the lower-risk they are. This low-risk classification then allows homeowners to enjoy reduced insurance premiums.

Credit scoring and how insurance companies in Montana use it

Many insurance companies in the State of Montana factor in a consumer’s credit score in one or both of these processes: rating and underwriting. However, as the Montana Legislative Services pointed out, these service providers have laws to follow, one of which is not using credit information solely.

An insurer that relies on the credit scoring model can use your credit information to determine how much to charge for your premiums. Such companies utilize specific rating levels or “tiers” when computing for their policyholders’ payments, and the higher your credit score is, the greater chances you have of paying for lower premiums.

MT insurance companies may also use a person’s credit score for underwriting purposes. Depending on your credit information, your insurer may either just simply renew your current policy or issue you with a completely new form.

Factors that have a bearing on your credit score

Insurance companies believe that the higher the credit score of policy holders, the lower the risk is. This low-risk classification then allows homeowners to enjoy reduced insurance premiums.

Because your credit score may have a significant impact on your Montana homeowners insurance payments, it pays to know more about the things you can do to keep it good-looking for insurers. One way to do this is to educate yourself on the factors that can cause it to go up or down.

Because you want to have proper insurance coverage without spending a lot of money towards premiums, keep the following things in mind so you can maintain good credit standing:

  • As much as possible, don’t make payments that go beyond their due dates. Your past payment history, which includes the frequency and the total number of late payments can lower your credit score. Number and frequency of late payments.
  • Keep your outstanding credit at a level you know you can afford. When you have too many open lines of credit, such as valid credit cards and personal loans on top of your mortgage, insurance companies most likely will regard you as high-risk. Again, being in this category increases your odds of having to pay premiums higher than necessary.

The Montana Department of Justice strongly recommends all its residents to obtain a copy of their credit report once a year so that they can track their information and make sure there are no errors in it. This is extremely important, as even just the slightest mistake on your record can already make a huge difference in your homeowners insurance premiums.