States are taking a second look at how credit scores affect car insurance rates

[Anonymous]

Obviously someone @Save-n-Invest was going to have to go there. Everything is not about race except to people like you.

Btw, I have pretty decent credit because I can afford to pay my bills on time...but I know when I was younger, broker and credit challenged I was a much better driver. Probably because my reflexes and senses were sharper. 

[CreditCuriosity]

Five things we don't discuss on myFICO:  http://ficoforums.myfico.com/t5/User-Guidelines-General/5-Things-We-Don-t-Talk-About/td-p/336929

[Save-n-Invest]

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@Anonymous wrote:

Obviously someone @Save-n-Invest was going to have to go there. Everything is not about race except to people like you.

Btw, I have pretty decent credit because I can afford to pay my bills on time...but I know when I was younger, broker and credit challenged I was a much better driver. Probably because my reflexes and senses were sharper.  

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Apologies. I was not making a reference to race. I'm sorry that the post read that way.

I'll be more careful and take a step back from some topics.

[Jazzcat]

I'm in the collision repair business. I'm not certain credit score is used as an indicator of safety so much as an indicator of illegality, like having your car stolen burned or vandalized for the claim money.

Another thing, be grateful if you do not live in a "no-fault" state. In most states I believe there is the insured party and the claimant party. It seems that in a no-fault state every claim goes on your own carrier

[Jazzcat]

As an insured person your policy is governed by contract law. As a claimant with (damages caused by someone else) things are governed by state statutory law.

Honestly I believe you're in a better position if you're a claimant and the other drivers company is covering your losses most state law requires that you be made whole. If your own insurance company is repairing your car you may have contracted away certain rights, like the use of a rental car for more than a common 30 day limit, or the use of original equipment parts on your repair rather than generic aftermarket or used Parts, etc.

[calyx]

There's a lot of talk about driving risk and insurance scores, but what the CBIS score really determines is the likelihood of filing a claim, not driving risk itself.

The correlation is that higher scores = less likelihood of filing a claim, not less likelihood of having an accident in an of itself.  Payouts are really what insurance wants to minimize.   Pretty sure they don't care if we demolition derby ourselves all over the roadway as long as we (any drivers) don't file a claim (and I learned to drive in Houston, so you know I can do it).

Fun fact (since it came up in the thread)  - not every states do points, so when I moved to a "point" state and had to take the written driving test, I failed because I didn't "study" since "I know how to drive"  and there were several questions about points.
12 years later - still no points, but I promise I'm legal to drive.

My CBIS score is miserable and some insurance companies care about that more than others (since NC does allow credit scoring to factor into rates).  I went with one that said "your score sucks, but we don't care, because you're a good driver."    

I don't agree with CBIS being a factor, I can just understand how it's a tool for insurance companies to mitigate their risk.

[Anonymous]

I find this discussion very interesting and there are valid points on both sides of the situation.

I never paid much attention to insurance rates until I decided to go rate shopping. I previously had Progressive and they would only let me have 6-month policies and the rates were high (my credit was terrible when I started the policy with them in 2/2014).

In August of 2019 I decided not to renew with them when my rates went up. I shopped around and found that another company offered the very same coverage for more than $200 a month less. The other companies I checked had very similar rates to this. I surmised that because my credit improved by leaps and bounds, my rates were dramatically lower. They also gave me a 12-month policy with a premium that was identical to what Progressive gave me for just 6-months!

I do agree that if the insurance companies could not charge someone for poor credit anymore, they would shift the charge to another category or institute a new policy where they could recoup what they would lose.

Progressive did not even try to check if my credit improved to give me a lower rate, much like I did not get half-decent offers from cellphone carriers around the same time. I did not even realize that credit had anything to do with insurance policies until that experience. 

[AceTen]

Thanks for sharing your story about progressive and finding a much better rate. That is good reminder to shop around for insurance.

I would just add that I read years ago to always requote your car insurance policy instead of taking the renewal and I noticed my policy rate would almost always be a bit cheaper on the requote (progressive). Maybe my credit scores improved over the years and that is why or maybe companies tend to offer a better rate to lure new customers. If a person's credit scores went down significantly, maybe they would not want to requote though.

[SoCalGardener]

I've always hated the idea of credit scores being a factor in car insurance rates. And I say that as a person with stellar credit.

I also say it as someone who--through no fault of my own (catastrophic illness)--has suffered through seeing my credit go down the toilet. Upsetting? Agonizing? Humiliating? Painful? All that and then some. My personal moral/ethical code is extremely strong and compels me to do the right thing at all times, so being put in positions of having no control over my finances and losing the status I'd achieved was truly horrible. What a slap in the face it would've been if I'd been denied car insurance because of it.

The thing is--and this is what doesn't make sense about it--I'm the SAME PERSON! When my scores were in the 800s, then fell to the low 600s, and have now been back up in the 800s for a long time, I was always the exact same person. Same morals, same beliefs, same ethics. When my credit scores were bad, they in NO WAY accurately reflected who I am as a person or how much of a risk I was as a driver. (I happen to have a spotless driving record, and can't even remember the last time I filed an insurance claim, but that's beside the point.)

While I can understand that businesses need to protect their assets by making wise decisions, I'll just never understand what my credit score AT THIS MOMENT IN TIME has to do with how I drive!

[Anonymous]

Thank you for this article. Much appreciated.