At Farmers, we are always looking for new ways to keep the cost of insurance affordable.

When it comes to insurance, we know what you want. You want quality coverage from a solid, dependable company. You want the peace of mind that comes with knowing, in the event you need us, we'll be there to get your life back to where it belongs quickly, compassionately and with as little hassle as possible. We also understand that you want all of this at the best price possible. And you feel, rightfully so, that if you are a good insurance risk, you should be rewarded with lower premiums. This web page explains the Risk Assessment Indicator -- a tool we use during the underwriting process to help us determine the premium you pay and, in some states, eligibility for insurance. Hopefully, it will answer any questions you have. As always, feel free to contact your agent if you still have questions.

Why Does Farmers Use Risk Assessment Indicators?

Several years ago, Fair, Isaac & Company, a company that specializes in predictive modeling, developed the concept of assessing a customer's credit history and evaluating it to predict future insurance losses. At the time, many industry experts had proven that a correlation existed between credit history and insurance risk.

Convinced that it was a good way to accurately and fairly segment the appropriate rate for the appropriate risk, Farmers started using Risk Assessment Indicators. Keep in mind, this is one of several factors that may be considered in determining your premium.

What is a Farmers Risk Assessment Indicator?

A Farmers Risk Assessment Indicator is a score based on credit report information. Depending on the kind of policy, Farmers' underwriters may use the resulting indicator along with motor vehicle records, loss reports and other application information to evaluate Auto and Homeowner insurance policies. It helps answer the question, "If we accept this applicant or renew this policy, will we likely be exposed to more losses than our collected premiums will allow us to handle?"

Where do Risk Assessment Indicators Come From?

Risk Assessment Indicators are based on information from consumer credit reports that insurers get from one or more of the three major credits bureaus: Equifax, Experian (formerly known as TRW), and Trans Union. Information used in coding includes:

	Outstanding Debt
	Length of Credit History
	Late Payments, Collections, Bankruptcies
	New Applications for Credit
	Types of Credit in Use

What's Not Included in a Risk Assessment Indicator?

Insurance Bureau Scores do not use the following information:

	Ethnic Group		Nationality
	Religion		Age
	Gender		Marital Status
	Familial Status		Income
	Disability		Address

How Can I Find Out My Risk Assessment Indicator?

Farmers understands that your privacy is important to you. While your Farmers Agent can tell you what your indicator is, no one at Farmers, including your agent or any member of your agent's staff, has access to actual credit history file. Your credit report is available from the credit bureau that provides the information used to develop your Risk Assessment Indicator.

Can I Improve My Indicator and, if so, How?

You may be able to improve your indicator over time by using credit responsibly. A Risk Assessment Indicator is a snapshot of your insurance risk picture based on information in your credit report that reflects your credit payment patterns over time, with more emphasis on recent information. To improve an indicator, Fair, Isaac & Company recommends that you should:

	Pay bills on time. Delinquent payments and collections can have a major negative impact on an indicator.
	Keep balances low on unsecured revolving debt like credit cards. High outstanding debt can affect an indicator.
	Apply for and open new credit accounts only as needed.

It's also a good idea to periodically obtain a copy of your credit report from the three major credit bureaus to check for any inaccuracies.

What if I am Turned Down for Insurance or My Premium Increases as a Result of My Indicator?

The Federal Fair Credit Reporting Act (FCRA) requires that we tell you if we take adverse action based, in whole or in part, on information contained in your credit report. We must give you the name of the credit bureau that provided the information and advise you of certain rights that you have under the FCRA so you can challenge any errors that might appear on your credit report.

What if the Information in my Credit Report is Wrong?

If you find an error in your credit report, you should report the error to the credit bureau. The credit bureau must investigate and respond to your request. If you are in the process of applying for an insurance policy, you should immediately notify Farmers about any incorrect information in your report. Small errors may have little or no effect on the Farmers Risk Assessment Indicator. If there are errors, the credit bureau will send Farmers a new score, once they are corrected. When the credit bureau reports the new score, Farmers will consider the new score.

Make sure the information in your credit report is correct by reviewing your credit report from each agency at least once a year. Call these numbers to order a copy (a fee may be required):

Equifax: (800) 685-1111

Trans Union: (800) 888-4213

Experian (formerly TRW): (888) 397-3742

Risk Assessment Indicator Facts and Fallacies