How Auto Insurance Companies use Your Credit Score to Determine how Much you pay for Your Auto Insurance Rates
Insurance companies can use use drivers’ credit scores and personal credit score information to determine how much to charge for auto insurance rates.
Your credit score can determine how much you pay for your auto insurance.
It’s called “Insurance Scoring” or “Insurance Credit Scoring” or “Credit-Based Insurance Scoring” and the Courts have deemed it permissible under the Insurance Code.
Here are 7 tips that drivers should know about how auto insurance companies can and will use your credit scores and credit information to charge you more.
1. Impact on Auto Insurance Prices — Insurers are using consumer credit scores and credit information to determine how much to charge the person for auto insurance.
2. Insurance Credit Scoring is Legal — Some insurance lawyers have said the Courts have certainly made the insurance companies happy when they ruled that the practice of insurance credit scoring is legal.
3. Limits — There are limits on how insurers can use credit information. For example, insurers cannot use credit scores to refuse coverage or refuse to renew existing coverage.
4. Credit History Inquiries Cannot Hurt a Person’s “Insurance Score” — Insurance companies cannot use credit history inquiries as a negative factor in calculating an “Insurance Score” or in reviewing credit information.
5. Right to Request to be “Re-Rated” — The insured has the right to request and the insurer has the obligation to obtain a new credit report or “Insurance Score” and re-rate the insured.
6. Request for Exceptions — An auto insurance company shall provide reasonable exceptions for an insured or insurance applicant whose credit information has been directly influenced by certain circumstances beyond their control.
7. Disclosure Requirement — Insurers must disclose that the insurer uses credit information or a “Credit-Based Insurance Score” in determining the price it will charge for auto insurance.
Tags: Auto Insurance, Auto Insurance Companies, Auto Insurance Prices, Credit History Inquiries, Credit Information, Credit Scores, Credit-Based Insurance Scoring, Disclosure Requirement, Insurance Code, Insurance Credit Scoring, Insurance Scoring, Re-Rated, Request for Exceptions