Why Your Social Security Number Is Required For Insurance

by Kelly Troy on July 14th, 2009

We Understand Privacy - But ALL Insurance Companies Require Your SSN

Don’t Shoot the Messenger…

Since we at InsuranceForInvestors have been asked many times why we need an applicant’s social security number and date of birth, I thought that I would write this brief article in order to help explain this request for personal information. Before we begin, it is important for you to know that insurance agents NEVER see anyone’s credit score, all we see is a total premium amount at the end of the quote.

Question # 1: Do I really need to provide your social security number to get a property quote?

Answer # 1: YES.

Question # 2: Why do ‘you’ need it?

Answer # 2: ‘We’ don’t – it’s the insurance companies themselves that require it for a quote or policy.

In today’s world, we all understand the need for privacy and keeping personal information confidential. We hear every week about computers being hacked into and data being stolen. We know. However, almost all insurance companies (standard and non-standard alike) doing business in the United States require both a Social Security Number as well as a Date of Birth for the primary applicant in order to receive a quote or issue an insurance policy. It is NOT up to InsuranceForInvestors as to whether or not we choose to obtain this information, it is a requirement of almost all insurance companies themselves. While you may not agree with it and you may not like it, that’s simply the way it is. You already need to provide this number to purchase a vehicle and obtain a mortgage – so it stands to reason that you also need to provide it in order to purchase insurance protection. If you choose not to provide this information, then we will not be able to provide you with an accurate insurance quote, regardless of how badly you may need or want one.

You see, the insurance industry is founded on the principals of risk management and risk mitigation, and insurance companies, as a way of rating and determining the business they insure, must make certain that they understand the risk that they are actually providing protection for. Believe or it not, people actually lie about past occurrences and this can affect the insurer’s risk position. Although you are not applying for ‘credit’ in the true sense of the word, as we already mentioned, this industry is based on statistical and actuarial risk analysis and management, statistically speaking, individuals with lower FICO (credit) scores have a higher propensity to file a higher-than-average number of claims for higher dollar amounts. This means more risk for the insuring company. Therefore, in order to create an accurate quote for the specific risk involved, the insurance carrier needs both the applicant’s Social Security Number and Date of Birth to verify identity and retrieve an insurance score (NOT a ‘CREDIT” score) in the background in order to determine a premium rate appropriate for the risk itself

Again, agents never see your credit score or personal information, just a total premium amount at the end of the quote. All premium and credit calculations occur internally (in the insurance companie’s software and servers) and agents have no access to your credit information.

In the event that there is a ‘no hit’ on your social security number (meaning that your SSN isn’t found or you refuse to provide one), you automatically get rated to the highest premium tier for whatever type of policy or coverage you are having quoted. The reason for this is simple – if the insurance carrier can’t verify your claims history or identity, they are obviously going to assume that it is a high-risk account and you are not going to get preferred rates.  This is rare, but it does occur sometimes for those people with very little established credit or those individuals with a recently-issued social security number, such as recent legalized immigrants, as well as those who simply don’t wish to provide this information.

Related posts:

  1. WRAP MORTGAGE FAQ’s – Do I Need To Provide a Social Security Number In Order To Get a Quote?
    You are not required to give your SSN – but providing it can help (or hurt) your premium. Social security numbers are used by almost all insurance companies in order to search for past claim history as well as to...
  2. Why Do I Have To Provide My SSN To Get A Quote?
    . That is a question we get asked all of the time and it has NOTHING at all to do with InsuranceForInvestors! Almost all standard insurance companies doing business in the United States require both a Social Security Number as...
  3. Understanding Your Insurance Score
    Your insurance score is a snapshot of your specific ‘insurance risk’ at a particular point in time – but it is important to know that it is not the same thing as your credit (FICO) score, although they are similar...
  4. The Problem of Residential Insurance in the Name of an LLC
    What many owners and investors fail to realize is that placing the property in the name of an LLC or Trust really doesn't have anything to do with insurance whatsoever – it is a strategy to allow anonymity (although not...
  5. WRAP MORTGAGE FAQ’s – What is an ‘Insurance Score’ and is My Credit Score Used in Determining Premiums?
    Just as your credit (FICO) score is a tool used by creditors to determine whether or not to extend credit based on past financial and payment history, an insurance score is a tool used by the vast majority of insurance...

Kelly Troy

ABOUT THE AUTHOR: Kelly Troy is founder and President of InsuranceForInvestors.com as well as an active real estate investor himself, purchasing and ‘rehabbing’ both residential and commercial properties and actively engaging in non-traditional investing throughout the United States. As the founder of “STREETSMARTinvesting” as well as the developer of the “Riches in Rehabs” and “Riches in Rentals” investor programs; he has traveled extensively to host workshops and impart to other investors and real estate professionals the same principals and skills that he himself has learned regarding how to successfully profit from purchasing real estate. Kelly also established his own successful real-estate investor’s group and he is a frequent guest speaker at other REI groups and he often hosts local investing workshops in addition to teaching TREC-approved MCE courses for licensed real estate professionals. Kelly is also a combat veteran of the United States Army Infantry as well as an active member of his community, serving on several City and Regulatory Boards and having either Chaired or actively served on the Board of Directors for many professional and community organizations. In addition, after having spent several years as a traditional mortgage lender, he founded his own private-lending firm, Genesis Funding Solutions, and he was a hard-money lender underwriting and managing private loans to investors for projects of all types across the country. He is also extremely well-versed in all forms of seller-financing and in brokering privately-held mortgage notes. Prior to his investing career, Kelly was also a professional safety and risk consultant having developed many safety and risk management programs in various industries and he traveled frequently developing and implementing industrial and manufacturing processes, safety, and quality assurance programs throughout both the United States and Europe. He also worked for the Texas Worker’s Compensation Commission (TWCC) as well as the OSHA Consultation Program (OSHCON) as an Industrial Hygienist and he is; therefore, extremely familiar with risk management and loss mitigation, personal liability, worker’s compensation, and commercial risks. While having owned a previous agency with Farmer’s Insurance Group, he was chosen from over 150 agents as the President of the graduating class at the University of Farmers in Los Angeles, California and he was later recognized as one of the Top 25 commercial agents in Texas.

This entry was posted on Tuesday, July 14th, 2009 at 9:18 pm and is filed under Claims, Ins. Premiums, Legal Topics, Miscellaneous. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply