Each insurance company uses many factors to calculate what they charge a customer for home and auto insurance.

Some factors are about you, your home, or your car.

For home insurance, common factors include:

• Your home’s age.
• How old your roof is and what it’s made of.
• Where you live.
• The cost to replace your house.
• Your claim history.
• Your credit score.

For auto insurance, common factors include:

• Your driving record and claims history.
• Where you live and how much you drive.
• Your age, gender, and marital status.
• Your occupation.
• The cost to replace the car you drive.
• Your credit score.

A change in any factor can raise or lower your premium. This includes characteristics that change over time, such as the value of your home or auto.

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Teaching Suggestions

• Ask students to make a list of major factors that most insurance companies use to calculate your premiums for home and auto insurance.
• Have students talk with an insurance agent or financial planner to obtain recommendations about the types of insurance you may need for home and auto insurance.

Discussion Questions

1. Why do insurance companies consider your credit score in determining your home and auto insurance premiums?
2. In your opinion, what should be the main factors used to determine the amount a person pays for auto insurance?