Are you looking online and calling brokers day after day to find the lowest auto insurance rate? Today you have to be a safe driver and have a near perfect credit score for some major vehicle insurance companies. They go beyond just looking at the driver history when they calculate quotes.
However, there are congressmen and congresswomen who are protesting against sharing the personal financial information with automobile insurers. Still, numbers of states see no problem with carriers looking into applicants’ finances in order to calculate premiums more accurately. Companies insist that they need these details to assess what sort of driver they are dealing with and legislators find the argument acceptable.
If you have a bad driving history but good credit record, it may help you get a lower quote. However, it would be quite a burden when an applicant has a bad driving record and in worrying financial state. The rates can be higher more than twenty percent.
Many insurers believe that the chance of receiving a claim is higher when the policyholder is financially straggling. This does not necessarily suggest that motorists try fraudulent methods to get money and more of it from insurers. It rather states simple tendencies. For example, an experienced driver with no money issues can choose to pay for small damages out of the pocket. However, when the budget is already stretched, families will not have this luxury.
Now, there are legislators working on a bill that would stop insurance firms from utilizing credit scores for the purpose of setting premium offers. The argument is that premiums should be based on driver history and a personal responsibility when driving. A person with poor credit score can be the safest driver and likewise a person with perfect financial balance sheet could be a dangerous driver.
The legislators claim that car insurance rates should not be based on extraneous factors outside of someone’s control. For example, a young driver could have been laid off and now has poor credit. Basing reliability of a driver on factors outside of driving is seen to be inappropriate by many. Drivers are not looking for loans; they are looking for cheap car insurance.
The good news is, if such bill passes in the congress, access to credit scores will be denied to vehicle insurers across the United States of America. The practice is already banned in Florida, Washington State, and Arizona. Legislators say it is against drivers’ rights to presume someone would be more at risk for an accident based on poor credit.
Other advocates of the bill claim that it is the responsibility of the insurer to investigate all claims and if the drivers have no history of claims, their rates should be no different than anyone else.
Also, advocates claim there is no connection between how a driver deals with cash and how he handles an automobile. Of course insurance companies are going to try and contradict this since they protect the practice of using credit-based insurance since the late 1980′s.
According to one major insurance company most drivers know their rates are based on credit worthiness. The firm has been using it as a process of underwriting and rating since 1988. The insurance company insist that it should not be a surprise.
One thing must be noted that insurance credit scoring is considered to be a soft pull on the records. So, people will not lose points just because there was a pull on the records. This is the case when a bank or credit card company checks the history.
There is a moral problem with penalizing someone for the current financial mess they are in. This will put them in a chicken and egg situation. Because they have a bad financial record they will get charged higher mortgage and insurance rates. And since they have to pay more for credit now, it will be harder for them to recover quickly. This can easily turn into a circle if they do not get out of it quickly.
Despite the objections, utilization of insurance ratings will probably stay. Nonetheless, motorists should remember that each auto insurance company places different level of importance to credit scoring. In other words, while some companies may increase the premium as much as twenty five percent, others may only allow a slight influence.
As always, consumers should get several quotes before they give up and accept higher premiums. Today, it is no bother to check for quotes online. Half an hour of your time may start delivering hundreds of dollars of savings to you.