Many property and casualty companies have begun using credit reports and scores to price their policies. While the two may seem unrelated, credit scores have been proven to be strong predictors of future claims.
The use of credit scores for home and auto insurance is explicitly allowed under the Fair Credit Reporting Act, and permitted by the Federal Trade Commission.
Retired Agent and Broker, Self Employed, Albany NY USA
Some insurance carriers may use a credit score for rating purposes. Most of the insurance carriers in my state (New York) use a 'credit profile' which means they access one of the big three credit bureaus and select specific items. What they select, how they interpret the data, and how it affects your premiums is not available for your scrutiny. In NY, credit profile is mostly used for new business quoting purposes for home and auto insurance. Carriers in NY load in a whole bunch of rating info when determining your premium - gender, age, marital status, own or rent your home, driving extract, # of years licensed, prior claims on home and/or auto policies, is your prior carrier preferred, standard, or substandard, distance driven to work, pleasuire or business use, and a lot more. Keep your 'credit profile' and score as clean as possible. Most banks and credit unions have credit specialists who can advise you for free on how to do this. For example, pay all bills ahead of time if possible and always pay more than the minimum amounts. Don't have credit lines totaling more than a certain % of your gross annual income, etc. Credit profile is a major influence when getting insurance quotes. I know of no 'proof' credit profile is a determinate of loss potential, but using credit profile for insurance rating is the way of the world.
Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
Credit history can be one of many factors that an insurance company uses in order to determine eligibility and pricing f a Homeowners Insurance policy. Any such factors and guidelines need to be filed and approved by your state Insurance Department and must be applied fairly and equitably every time a new business policy is being submitted and a renewal processed.
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The use of credit scores for home and auto insurance is explicitly allowed under the Fair Credit Reporting Act, and permitted by the Federal Trade Commission.