Re: Credit Rating impacts on Car Insurance Rates

Bird mama · ‎03-12-2010

I still think mominohio's Ma is onto something. They need to cap our insurance payouts in my state, it's out of control.

There are times when you must speak, not because you are going to change the opposing side, but because if you do not speak, they have changed you.

Snowpuppy · ‎03-09-2010

Your state law allows the credit report to impact rates. Here in MI they use scores, too. You can ask them to pull your score more often if it's improving and you think your rates will go down.

The thinking is that if you're deep in debt you may be a worse risk. But as someone said they do it because they can.

There's also a risk score they use that's only available to insurers. It tells them how many claims you've had and what amount was paid out.

WenGirl42 · ‎07-05-2012

It's not about being "a sign" of anything. It's segmentation, pure and simple. Actuarial data shows that people with worse credit end up costing the insurance company more in losses over time. So their rates are higher.

Puzzle Piece · ‎06-29-2010

Whaaaaaaat !!!!!

Never Forget the Native American Indian Holocaust

guatmum · ‎03-11-2010

They do it because they CAN. They make LOTS of generalizations that are, in fact, incorrect in many if not most cases. Just an FYI, insurance companies charge higher rates to people who are SINGLE also. So if you are single with a lower credit rating, you're being raked! The logic behind it baffles me. I am single. I have to be careful with my money and possessions because I have no "safety net," no one to take over or help me if I am in a bad situation. Therefore, I am EXTREMELY careful with things, especially my car. If I had a low credit score and would find it hard to get a loan, I'd be doubly careful to maintain and safeguard my car. Therefore, I wouldn't cost any insurance company more than the average married.

Btw, I worked in insurance as an underwriter for a while. The data and actuarial tables they use are often outdated and are chosen to suit their purposes.

AngusandBuddhasMom · ‎03-10-2010

l I work in commercial reinsurance which obviously is separate then what you deal with. But still is dealing with the solvency of corporations and their ratings. I have no problem with the rating as I have good credit and so my insurance rate reflects that. Considering I live in a state with a disproportionately high rate of motor vehicle accidents by uninsured or under insured drivers I am glad for the credit rating.

All companies are rated by solid credit. Not just the insurance companies that you purchase your insurance from which need to verify their clients are credit worthy. So that they will be a better risk in the long run. The reason being is to see what the risk is incase of something catastrophic happening. Everybody moans and complains but when they need it they expect it paid asap.

This is not new this system has been around a long time. It is how we do commerce and trade. Your rating is just apart of the day to day business and economic growth or recovery of everyday business. The stock market is dependent on this as is the continuation and movement of trade.

AngusandBuddhasMom · ‎03-10-2010

@guatmum wrote:
They do it because they CAN. They make LOTS of generalizations that are, in fact, incorrect in many if not most cases. Just an FYI, insurance companies charge higher rates to people who are SINGLE also. So if you are single with a lower credit rating, you're being raked! The logic behind it baffles me. I am single. I have to be careful with my money and possessions because I have no "safety net," no one to take over or help me if I am in a bad situation. Therefore, I am EXTREMELY careful with things, especially my car. If I had a low credit score and would find it hard to get a loan, I'd be doubly careful to maintain and safeguard my car. Therefore, I wouldn't cost any insurance company more than the average married.

Btw, I worked in insurance as an underwriter for a while. The data and actuarial tables they use are often outdated and are chosen to suit their purposes.

They are not cast in stone and it is up to the consumer to question their rate when getting a policy or renewing. If you do not speak up and ask why then they will not upgrade or reconfigure your policy.

missy1 · ‎03-10-2010

IMO they don't go hand in hand. You could have a high credit score when starting the policy, and then go to a low rating. (due to medical bills etc.) My insurance never checked my scores, neither have my employers. Most people would pay their car insurance, before a credit card/etc. Poor credit score, doesn't mean more accidents.

AngusandBuddhasMom · ‎03-10-2010

@missy1 wrote:
IMO they don't go hand in hand. You could have a high credit score when starting the policy, and then go to a low rating. (due to medical bills etc.) My insurance never checked my scores, neither have my employers. Most people would pay their car insurance, before a credit card/etc. Poor credit score, doesn't mean more accidents.

Not always but it does give them an idea of how you pay your bills.

WenGirl42 · ‎07-05-2012

@AngusandBuddhasMom wrote:
@missy1 wrote:
IMO they don't go hand in hand. You could have a high credit score when starting the policy, and then go to a low rating. (due to medical bills etc.) My insurance never checked my scores, neither have my employers. Most people would pay their car insurance, before a credit card/etc. Poor credit score, doesn't mean more accidents.
Not always but it does give them an idea of how you pay your bills.

Actually, across the population (which is how statistics are determined), yes poor credit score DOES mean more accidents.