Bad insurance karma: How mistakes from your past can haunt your rates

Whether you got arrested for drunken driving three years ago or you just can't quit smoking, you may discover that your past behaviors are costing you -- in the form of higher insurance premiums. Fortunately, your past does not have to be your destiny. By acknowledging that you're racking up some bad insurance karma, you can turn things around.

Health and life insurance

If you have a history of serious health problems, you'll probably be denied coverage or charged higher premiums if you're looking for life insurance or individual health insurance.

  • Quit smoking. Smokers pay more in premiums than nonsmokers do, according to the National Association of Insurance Commissioners. And if your habit leads to cancer, you may be unable to get health and life insurance.
  • Reconsider risky activities. Because life insurance companies have an interest in predicting how long you'll live, they don't like to see that you're involved in activities like mountain climbing, motorcycle riding or skydiving. If these activities are part of your life, you'll likely end up paying extra for them.
  • Lose weight and eat healthy. You'll likely be denied coverage if your body mass index is more than 39, according to the California Department of Insurance. Moreover, obesity can lead to diabetes and heart disease, which might make it difficult and costly to get life insurance.

Auto insurance

Decisions you make behind the wheel can have a profound effect on your insurance coverage. To win your auto insurance company's trust, consider doing the following:

  • Improve your credit: In the eyes of an insurance company, having bad credit or filing for bankruptcy means you're not fiscally responsible -- and probably not responsible behind the wheel either. According to the Federal Trade Commission, "credit scoring" is a common and legal practice in the insurance industry.
  • Don't drive while under the influence. A DUI or DWI conviction is perhaps the worst auto insurance karma there is. According to Progressive, you'll likely have to get high-risk auto insurance and pay years of elevated premiums.
  • Take a driving safety course. Completing a defensive driving course may get you back into your insurer's good graces. Some states require discounts for older drivers who take remedial driving classes.
  • Make your car safer. Parking your car in a safe neighborhood lowers the chance of theft -- and many auto insurance companies offer discounts for side airbags and anti-theft devices.
  • Limit your mileage. Driving more miles means a greater chance of getting in an accident, according to State Farm. Cut down on your commute, and consider pay-as-you-drive insurance, which rewards you for doing so.

Home insurance

Repairing and replacing a home costs a lot of money -- and insurers will want to make sure it's worth putting a lot of money on the line for you.

  • Think before you file a claim. The insurance industry uses a database called the Comprehensive Loss Underwriting Exchange (CLUE) to evaluate risk. Your CLUE report contains any claims you've filed in the past five years, according to the Privacy Rights Clearinghouse. If you've filed a lot of claims, that could be a red flag for current and future insurers.
  • Check up on the previous homeowner. Sometimes, bad karma may not be your fault. Properties have CLUE reports too, and, if your dream home has a history of water damage, your insurer may not want to take the risk. You can get one free CLUE report a year, according to the Privacy Rights Clearinghouse. Ask your real estate agent to get one for your potential home.
  • Fortify your home. If you live in a bad neighborhood, you can keep bad karma (burglars and vandals) away by installing alarm systems, better locks and more secure doors. Many insurers offer discounts if you install these safety features.
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