States ban car and home insurance companies from using credit scores to help tough consumers

AMERICAN looking for a reasonable rate of insurance is in the midst of a political tug-of-war between legislators and insurance companies.

Washington State’s insurance commissioner has enacted a ban on credit checks on insurance companies, joining several other states.

Credit checks ban on insurance companies coming into effect in Washington state


Credit checks ban on insurance companies coming into effect in Washington state

This new rule forbids insurance companies from using credit scores to set rates for Automatic, host and renters insurance.

The rule is set to go into effect on March 4 and is in the process of being implemented.

It will stay in place for three years after the federal or state emergency declaration ends, whichever is longer.

A spokesman for the commissioner said the new rule was the best option for consumers in Washington.

The Commissioner also wants to require insurance companies to provide policyholders with a written explanation of any change in premiums.

The American Property Accident Insurance Association has taken legal action to block the regulation.

Who opposes Washington’s new insurance rule?

The American Property Accident Insurance Association (APCIA), Washington Professional Insurance Agents, and Washington Independent Insurance Dealers and Brokers jointly filed two regulatory actions this week .

“The Commissioner’s extreme actions exceeded his authority, bypassed the legislature and robs the interests of the public,” said Claire Howard, APCIA’s senior vice president, general counsel and corporate secretary. consumers from a highly competitive private market.”

Republicans and insurers say the rule will add costs to people on fixed incomes, like the elderly, who benefit from lower insurance rates because of their good credit scores. surname.

Meanwhile, the governor of Washington supported the commissioner’s move.

Which states prohibit the use of credit scores?

Some states have instituted stricter regulations on the use of credit data for auto and homeowner insurance policies.

Experian, a consumer credit reporting company, says the following states have gone further in restricting how it can use your credit information.

In other states, you may be denied credit altogether or simply assigned worse deals if you have a bad credit score.

California: California insurance companies do not use a score based on your credit or credit history to underwrite or rate auto policies, or set rates for homeowners insurance.

Hawaii: Hawaii prohibits the use of credit ratings when setting standards, including underwriting standards and rating plans, which determine your premium.

However, your credit can affect your homeowners insurance.

Maryland: Auto insurance companies can use your credit history to help determine your rate under a new policy.

However, it cannot use it to decline your initial application, cancel a policy, refuse to renew a policy, or increase your premium on a single renewal.

Massachusetts: Massachusetts law prohibits auto insurance companies from using credit information or credit-based insurance scores when setting rates, underwriting a new policy, or renewing an auto policy.

Homeowner insurance rates can’t be based on your credit either.

Michigan: Michigan insurers cannot use your credit or credit-based coverage as part of their decision-making process to deny, cancel, or refuse to renew an auto policy, or host.

Also, auto insurance companies cannot use your credit score to determine your rates.

We explain how single traffic violation can cost you up to $1,433 in car insurance.

In addition, Best time to go DMV.

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