Smart Auto Insurance Blog

According to the article “Credit Scores Studied As Factor” by the Freepress Staff on Freep.com, the Michigan Supreme Court listened to arguments on October 7th about auto insurance companies using a customer’s credit score when considering their home and auto insurance rates.

Using the credit score was outlawed by the state back in 2005, but the insurance companies will be allowed to use the score as a risk factor pending the outcome of their lawsuit currently in the Supreme Court.  Most insurance companies offering Michigan auto insurance are to offer some sort of discount on premiums with use of a credit score.

Lawyers representing the insurance industry told justices that Linda Watters, the former Insurance Commissioner, overstepped her boundaries when she banned discounts based on good credit ratings.  Attorney Peter Ellsworth believes that insurance scores do not work and states that 60% of policyholders will pay higher costs if the court allows the ban of the credit score.

According to the Insurance Journal, Mich. Governor Jennifer Granholm is asking for a year-long freeze in auto insurance rates. Michigan auto insurance is some of the most expensive in the country, and state legislators want the time to figure out reforms.

The Office of Financial and Insurance Regulation will have the ability to penalize any auto insurance companies that refuse to refrain from increasing premiums during the next 12 months, the Democrat says.

Michigan residents have been hard hit by this recession, especially those in the Detroit auto industry. This request will offer them a measure of relief.