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How Insurers Determine Your Premium: An Interview with Teri Walsh of Sachs Walsh Insurance

By Teri Walsh

Tell us a little bit about your company and its foundation.

Sachs Walsh Insurance was founded in 1978; we are an independent insurance agency that represents several different companies. We specialize in property and liability coverage for individuals and businesses, although we also offer life and health insurance services. We are the largest privately owned agency in Westport.

First off, what is the definition of an insurance premium?

An insurance premium is the price charged to provide a specific amount and type of coverage on a specific risk.

What factors do insurance companies use to determine your premium?

An insurance premium is determined by the risk being transferred to the insurance company. For instance on auto insurance, if you have accidents and tickets, you are going to pay a higher insurance premium than a person with a clean driving record. If you have a sophisticated alarm system in your home, you are going to pay a lower insurance premium than a person with no alarm system. The amount of coverage you purchase affects the premium; the size of the deductible you choose affects the premium; the proximity to the coast affects the premium.

Why is my income not a factor in this process? Isn't my income level important?

Insurance companies use actuaries to establish rates, and it has been determined that how much money you make is not nearly as important as how you handle your credit. That is why income is less important than credit score. I like to call it the "responsibility factor." Studies show that lower credit scores correlate with increased claim activity.

Is there any way to receive a reasonable premium with a low credit score?

Credit scoring has a big impact on the cost of insurance. A high score reduces premium, a low score increases premium. There are some companies that place more importance on credit score than others, however most insurance companies are now including what they call "insurance score" in their rating. Another newer addition to the rating process is the use of continuous insurance. If a person has previous lapses in coverage, this can also increase the insurance premium.

What's the best way for people to get in contact with you and your company?

Sachs Walsh Insurance can be reached through our website or by phone 203-227-7787. We make it a priority to educate consumers on how to keep the cost of insurance down.

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