Bad Credit and Car Insurance Rates

When things went bad for us 5 years ago, Allstate tripled our rate due to bad marks on our credit. We changed over to Geico and got basically the same rate we were paying Allstate. I believe since then that a class action law-suit was filed against Allstate for credit scored based rate jacking.

I work in the personal insurance field and unfortunately all of our companies use a credit score to help determine the rates...I've felt the sting of it as well because my credit isn't that great. The theory behind it is that if you have better credit, you are less likely to get into accidents, but I think thats bull.

That is all bullcrap...that doesn't make any sense whatsoever...people with bad debt can be just a safe driver as a person with good credit..unfair :twisted:

Yeah, that's what I read also. Like someone has bad credit is going to go out driving like a maniac? While someone with good credit drives like a Saint?

Please.

I'm doing the same thing you did, NascarDevil, and have been looking around at other companies. Unfortunately, I've gotten the same response from all I have checked so far: because of my credit score, I get a higher rate.

The practice is banned in some states, but apparently not in Florida. :(

Mods! Delete my "Guest" post so it's not duplicated. I guess I got timed out because I was taking too long to type this.

Too long winded, I suppose.

OK, just thought I'd update you guys on this situation. If you were interested.

I now have a new car insurance company.

After doing some digging into Florida "regulatory departments", I was directed to the Florida Department of Financial Services. The woman I spoke to was OK; however, it seemed she was either new at her job or didn't know what the heck she was doing. I asked her about something I thought I remembered reading somewhere, that Car Insurance companies could not raise your rates if you had bad credit due to unemployment, medical problems, or for one other reason I cannot remember.

Bam! I fit two of the three criteria right there.

After putting me on hold several times, obviously getting help because she didn't know what I was talking about, she finally gave me Florida Statute 626.9741. I quickly Google'd it while on the phone with her, scanned through it, and found section 5 (e). This section states, if I received a higher rate due to bad credit, and the bad credit was due to "temporary loss of employment", I can request an appeal with the insurer and they have 10 days to respond to it, after I provide "reasonable documentation."

I called my insurer, provided them with this Statute number, and advised them I am requesting an appeal. I was advised they didn't know what I was talking about; however, they forwarded this information on to their legal department for review.

This is where it gets really frustrating for me.

I received a message from my Insurer several days later advising I need to "provide documentation verifying that I was unemployed and how it adversely affected my credit." I called back 3 times after I received the message, of course talking to 3 different CSR's, asking them to clarify what sort of documentation they were looking for. All 3 just kept reading back the same line to me: I need to provide documentation verifying I was unemployed and how it adversely affected my credit.

How the heck do I "verify I was unemployed?"

I was getting really steamed by the third call.

That's all well and good you keep reading the same thing over and over to me, but can you please clarify what exactly you are looking for? I finally had to ask for a supervisor. Of course one wasn't available, so I said I would call back the next day.

I did, and asked for a supervisor straight away. I gave her the condensed version of what is going on and asked her to clarify what documentation they needed. I told her they could look at my credit report and see all my accounts went delinquent on precisely the same month, April 2007. The only two I managed to keep paying on was my car and my car insurance. Also, if they looked over my payment history they could see all of my premiums during that time were paid by another family member and these payments didn't have my name on them.

Well, I made the mistake of mentioning the reason I was unemployed was due to medical problems, which led her to suggest I get a note from my doctor.

Well, I am tired of making my personal medical business known to people that really don't have a reason to know. After the experience I had with my previous employer making my medical problems known to my co-workers, quite illegally I might add, I have become sensitive (maybe overly so) to telling anyone my medical history or business. In my opinion, there was no reason my car insurance company needed to know that. The statute only mentions "temporary loss of employment", which could be for many different reasons, not just medical.

I advised her I would fax in a copy of my tax returns for 2007 and they should be able to tell from the income reported, all 5,000, dollars of it, I didn't work for the entire year of 2007. She said that was fine, but I should still get a doctor's note.

So I did fax in my income tax returns, along with a letter advising they could look at my credit report and see when all my accounts when delinquent, look at my payment history and see who paid my premiums, and look at my income tax return and see I didn't work for all of 2007. This means I didn't have money to cover all my bills, which made them all go into collections, affecting my credit score, and causing them to give me higher insurance rates. And I would not be getting a "doctor's note" and telling them all my personal medical business because it really wasn't any of their concern and they have no reason to know.

Probably 1/2 hour after I faxed this in, I get another message from my insurance company advising they had received my fax and they were still going to need a note from my doctor.

Well within an hour I had a new car insurance policy with a different company and called them to let them know not to renew my policy at the end of the month as I will be switching at that time. I also called the Office of Financial regulation back, asking them if there was some definition they could give as to what they consider "reasonable documentation." Of course, they couldn't. I asked them was I the only person that had ever contacted them with this problem; a car insurance company raising my rate based on my credit score, not my driving record. Then the fact I got the runaround from my insurer when I appealed their decision? She couldn't answer that.

She did offer to take a complaint from me, which I did. I also e-mailed the Governor, Lt. Governor, My State Representative, and my State Senator. I told them they really need to look at this practice by car insurance companies, because of the fact car insurance is required by law in the state of Florida and insurance companies are fleecing consumers by raising rates due to credit scores based on some vague explanation that bad credit makes people higher risks, when their driving record (like mine) is clean and clear. I just renewed my license in 2007 and did it all on the internet, without having to go into the DMV, because of my "safe driving record."

If my driving record is considered "safe" by the state of Florida, then it should also be good enough for any insurance carrier! I shouldn't get higher rates because I have bad credit due to unemployment.

Of course, because I didn't include some big fat campaign contribution check with these E-mails, I'm sure they'll never read or respond or even act on them.

Ugh! :( So did you get better rates with the new company, or were they still high because of your bad credit?

The rates with the new company are only slightly better; however, it was the principal of the matter to me. I really hate when anyone gives me the runaround like that.

I just feel bad for the Florida residents that may not be able to, for whatever reason, switch car insurance companies like I did. They are just resigned to having to be ripped off like that and they feel they have no recourse.

I'm just trying to make it better for others and stand up for what I feel is right. Probably won't get me far, but at least I can say I tried.

I thought it was a hoot when I read the state statute to the CSR I was talking to and told her what section too look for. She didn't seem to believe me even after I had her Google it, while talking to me, and she saw it for herself.

I belive that the reason that credit comes into play with insurance rates is because statistically fraudulant claims are almost exclusively filed by those with bad credit. NOT that everyone with bad credit does, or that no one with good credit would, but in insurance, everything is based on statistical information.

I work in the personal insurance field and unfortunately all of our companies use a credit score to help determine the rates...I've felt the sting of it as well because my credit isn't that great. The theory behind it is that if you have better credit, you are less likely to get into accidents, but I think thats bull. "

Hah that logic is funny...my credit is horrible and renewal time is coming for my insurance...not to mention i had an accident this year. Not looking good for me.

the company I work for does not re-rate existing clients, only new clients. I don't think most companues re-rate.

My companies don't rerate the existing customers either, I end up seeing it when my customers ask us to shop their rates & see if anything out there is better, then their credit score comes into play, of course so do all the accidents/tickets that they didn't know or forgot that they had... :D

Texas allows your insurance rates to be affected by your credit scores. They've also passed laws where if you get caught without insurance they can impound your car, charge you around 300 for the ticket and then 250 each year for the next three years.

Well, my old insurance company sure re-rated at renewal.

thanks for the differing point of view smo65d11. You know, you are actually the first person that has offered an actual explanation as to why insurance companies feel drivers with bad credit are higher risks. My old company and the Florida Department of Financial Regulation never could. They just kept telling me drivers with bad credits are higher risks, but never could tell me why they feel this is so.

I still say it's hogwash, though and the practice needs to be abolished. As this economy keeps getting worse and worse, I'm sure more and more people than ever before are going to have bad credit. Some that never would have had it before. Insurance companies shouldn't reap windfall profits as a result of a bad economy. Especially when the Federal Government had to bail some of them out!

I agree completly. It was much easier to find a lower rate for a customer several years ago before all the companies started with the credit score thing.
I also agree that it needs to be abolished. My credit might be "slightly" tarnished, but I also haven't had an accident in 5+ years (knock on wood), yet I'm being penalized because of the credit...I have a few customers who, by their statistics, are supposed to be much better risk's than I am who have several accidents in the last year or so, yet they are getting a better rate & the accidents might not be applied to the policy for another year or so, depending on when the company decides to run their reports. :x

Ron I think that it is because people are afraid to offend the average person by mentioning bad credit .... and there are probably state laws that say we can't say "bad credit", but since no one knows who I am here, there ya go!

I have had clients fly off the handle at me before, no matter how diplomatically I would say it. And technically there are something like 35 things that goes into establishing the "Insurance Score" that we use, but I would estimate that a huge % of the score is directly impacted by credit.

kinda like the FICO scoring, SO much is "secret". Good luck with your new company, I hope they are able to stay in business and pay any claims you might have. I work for a very conservative company so thankfully we have not been affected at all by all of this bailout mess, our stock prices have actually gone up BECAUSE we are so conservative.

It's a law here in Florida also, that you are required to have auto insurance or your licence gets suspended. Not sure what other penalties there are; however, I'm not usually worried about it because I do keep my insurance current.

Funny thing that, I was hit several years ago by a young lady (she was at least 18 Y/O) that had neither auto insurance nor a valid licence. So my company had to pay to get my car fixed even though she was at fault.

I remember she was crying, before the cops arrived, saying she didn't have her licence. I thought she just didn't have it on her and explained the cops will usually write you a ticket if you don't have it on you and you have a certain amount of time to produce it. The she clarified that she'd never had a licence.

I was very P/O'd!

I don't even think she got a ticket for not having a licence, the cop just bawled her out for it.

I was even more P/O'd!

If that had been me, I would have probably been in an orange jumpsuit and shackles within the hour.

I just received an email from Geico today that due to my "imperfect credit score"-my rate had been adjusted on the quote I received. I wrote them a nasty email informing them that I have never ever had an accident nor a ticket, yet they are basing the rate on my credit and that is bull****!!!! Where can I go to get a decent rate in Arizona? Does anyone out there know?

I don't know ANY companies in my state that do not consider someones financial stability. There might be some, but I don't know of any. Have you tried Progressive? They seem to market to young and "imperfect" drivers, so maybe they either don't consider credit at all, or maybe they don't weigh it very heavily when determining rates?

Kimbers simply out of curiosity, what was the original rate, and then what did it go up to? Was it a large percentage or minimal?