Car Insurers Under Fire For Pricing Practices

[1963C10]

Credit score? Occupation? Education? All to determine your rates? Why don't they look at the cleanliness of your car? I always park in the 'door ding free zone' and keep my vehicles spotless. That passion and the terrible thought of getting a scrape or scratch makes me very low risk.

[J. A. Michaels]

Re: Car Insurers Under Fire For Pricing Practices

I agree. It always amazes me what goes into determining your rates.

[David Fermani]

Re: Car Insurers Under Fire For Pricing Practices

They figure if you are a deadbeat at paying your bills, it will influence and affect your driving practices. The biggest thing that influences your premium is your driving record and the zip code you garage your car in.

[DAC17]

Re: Car Insurers Under Fire For Pricing Practices

Whether people like it or not, the factors they use are highly statistically correlated to claim history. If you are a good driver, you should appreciate these rating formulas. If you have something to hide, well.....

[roushstage2]

Re: Car Insurers Under Fire For Pricing Practices

Whether people like it or not, the factors they use are highly statistically correlated to claim history. If you are a good driver, you should appreciate these rating formulas. If you have something to hide, well.....

I'm curious. How so?

[DAC17]

Re: Car Insurers Under Fire For Pricing Practices

I'm curious. How so?

The factors that they use are good representations of claim history. The reason people don't like them is that they are so good. For example, if you don't pay all your bills on time, you're more likely to have an accident, so you don't want insurance companies knowing your credit history. Was that the question?

[J. A. Michaels]

Re: Car Insurers Under Fire For Pricing Practices

So a person with bad credit cannot be a safe driver? It bears no correlation for me. One is not predicated on the other.

To me it is just another reason to try to justify higher rates. Another one of these magic studies, Thy are turned out by insurance groups to justify ther means.

You watch, the Atlantic basin hurricane season has been especially busy this year. Thankfully no major damage to the U.S. However they are going to use the active season to increase our homeowners insurance next year. Watch, you'll see.

[David Fermani]

Re: Car Insurers Under Fire For Pricing Practices

The factors that they use are good representations of claim history. The reason people don't like them is that they are so good. For example, if you don't pay all your bills on time, you're more likely to have an accident, so you don't want insurance companies knowing your credit history.

Correct, but I wouldn't say claim "history" all together, but exposure to potential claims. People who have poor credit tend to not drive responsibly and pay their insurance bills. Being an Auto Appraiser who goes into a multitude of demographic areas/people, I certainly notice patterns to support this stereotype.

So a person with bad credit cannot be a safe driver? It bears no correlation for me. One is not predicated on the other.

Not saying they "can't" be a good driver, but they have a stonger propensity to experiencing a claim and therefore get penalized for it. That's one of the factors the Insurance industry is permitted to use for their underwriting ratings.

[jaymz]

Re: Car Insurers Under Fire For Pricing Practices

We just refi'ed our house, and as part of the loan "investigation," our bank checked with our house/auto insurance carrier to verify coverage, etc. We found out about the bank's inquiry because our insurance agent called to say she could probably reduce our premiums based on credit info from the re-fi. Not sure what they looked at, but she did cut our auto premium over $350/yr.

Jim

[J. A. Michaels]

Re: Car Insurers Under Fire For Pricing Practices

We just refi'ed our house, and as part of the loan "investigation," our bank checked with our house/auto insurance carrier to verify coverage, etc. We found out about the bank's inquiry because our insurance agent called to say she could probably reduce our premiums based on credit info from the re-fi. Not sure what they looked at, but she did cut our auto premium over $350/yr.

Jim

That is a great deal for you. Congrats.

[cnfowler]

Re: Car Insurers Under Fire For Pricing Practices

I agree with J. A. To get car insurance, they should look at your driving record. Plain and simple. When you get a bank account, they don't look at your driving record. Why? Because it has nothing to do with getting a bank account. Its not rocket science, people.


Colin

[J. A. Michaels]

Re: Car Insurers Under Fire For Pricing Practices

Colin, I like your analogy better then mine. Very well put.

[JoeDirt]

Re: Car Insurers Under Fire For Pricing Practices

The credit score thing is completely ridiculous. You could make the exact opposite argument- people with bad credit have less money and therefore drive safer to avoid repairs that they cannot afford to fix.

Michigan rocks- insurance rates based on credit, AND no fault rates that are sky high...

[roushstage2]

Re: Car Insurers Under Fire For Pricing Practices

The factors that they use are good representations of claim history. The reason people don't like them is that they are so good. For example, if you don't pay all your bills on time, you're more likely to have an accident, so you don't want insurance companies knowing your credit history. Was that the question?

I was wondering what the factors were.

Not directed towards anyone:
Credit is poor subject to use, in my opinion. I have what I will call "middle-of-the-road" credit because I don't have a lot established, nor for a long period of time, and I now have quite a few student loans on there from attending college. I have never missed paying a bill, ever, payed two cars and a couple of other small loans off on top of that. However, because I don't have a "great" credit score, I'm more at risk for an accident? Maybe they should raise my rates too because I don't have a retirement account set-up. I mean, it makes sense, right?

[cnfowler]

Re: Car Insurers Under Fire For Pricing Practices

I was wondering what the factors were.

Not directed towards anyone:
Credit is poor subject to use, in my opinion. I have what I will call "middle-of-the-road" credit because I don't have a lot established, nor for a long period of time, and I now have quite a few student loans on there from attending college. I have never missed paying a bill, ever, payed two cars and a couple of other small loans off on top of that. However, because I don't have a "great" credit score, I'm more at risk for an accident? Maybe they should raise my rates too because I don't have a retirement account set-up. I mean, it makes sense, right?

Colin