Auto Insurance Quotes: Credit Report Important
For many years, auto insurance companies have been using a consumer’s credit score to help determine risk and calculate auto insurance quotes. It has been debated by industry experts and consumer advocates whether or not this is fair and whether or not it makes sense. Most auto insurance companies agree that this is an accurate way to determine risk, and study after study shows that riskier drivers tend to have lower credit ratings.
The National Association of Insurance Commissioners has been probing insurers continuously about their credit score use and the auto insurers are defending themselves. This is according to the article “Auto Insurance Companies Defend Use of Credit Scores” found on Insurance NewsNet.com. With a struggling economy, the issue is even more hot. People with once excellent credit scores are finding themselves out of work and paying late on bills which is affecting their credit. Double whammy once they receive an auto insurance quote and see their rates have increased due to the drop in their credit score.
The use of credit scores is supported by most states, which use a model from the National Conference of Insurance Legislators. Louisiana commissioner of insurance, Jim Donelon, says he doesn’t see anything wrong with the practice and he attended a public hearing with the NAIC’s Property and Casualty Insurance Committee where auto insurance companies defended their use of credit scores when determining auto insurance rates for customers.