Did you know that some insurance companies base the rate they charge on a clients credit score? The do have their reasons. They have statistics that show people who pay their bills are more responsible and have fewer claims. Do you agree with this practice?
2007-10-16 05:16:01 · 10 answers · asked by Maggie M 2 in Business & Finance ➔ Insurance
Absolutely! Not only do people with poor credit have more claims (statistically), but they also take more man power to service and manage their policies. They are the ones who are late (more often than those with good credit ratings) - therefore needing additional paperwork, ie the cancellation notice, then the reinstatement letter. They are the ones who need a phone call reminder on top of the written notices. Do I feel bad because, sometimes, there is someone who is going through a TEMPORARY financial struggle, yet will be placed into this category? Yes, BUT, the insurance industry has to go with statistics - if we were able to adjust premiums based on everyone's sob story, 90% of the people out there would lie to get a lower rate - how do you tell who is telling the truth? Additionally, it teaches kids at an early age that their credit is important.
2007-10-16 08:35:33 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Do you agree with charging more for 16 year old boys than 35 year old married men? It's the same thing.
It's perfectly true, that if you lump 100 people with low credit scores together, that group will have a combined higher payout, and combined higher number of claims. Insurance commissioners in 49 states agree, the data validates credit scoring as a way to predict claims activity.
So if you don't want insurance companies to discriminate between people more and less likely to have claims, that means you want every person to have the exact same flat rate - so the guy with 5 dui's pays the same as the guy with a clean driving record, right? The guy with the minivan pays the same as the guy with the Lamborghini. That's fair, right?
Don't forget to extend it to life insurance, too, so that the 30 year old guy pays the same rates as the guy who's 90 and has one foot in the grave. Yikes! We'll all have our rates quadrupled, if we're LUCKY!!
2007-10-16 17:32:20 · answer #2 · answered by Anonymous 7 · 0⤊ 0⤋
Yes I do. People with poor credit scores tend to file more claims and these claims are often inflated. These households are usually delinquent in their payments, and require more service work than policy holders with better credit history.
True story: I had a client call me on a Thursday and could only pay half of her car insurance payment. I agreed to take half this week and half the following week. On Sunday, I saw her at a Titans game with a tray full of beers & dogs. She saw me & avoided me by walking the other way.
She didn't pay the following week, her policy cancelled & she had an atfault accident 2 weeks after the cancellation totaling both cars. She called & I had to inform her she had no coverage.
2007-10-16 16:03:57 · answer #3 · answered by RB 5 · 0⤊ 0⤋
Hiya:
I am in the insurance industry and I ABSOLUTELY DO NOT agree with this practice.
It does not take into account that sometimes people make mistakes. It does not take into account that sometimes people have to make decisions about whether or not they buy food for an ailing parent or child versus paying a credit card bill on time.
If you are paying........you are paying. Your credit score is going to be affected by paying late but...you're still paying, right? So, why be punished (with higher rates) for paying something late. You are still responsible enough to PAY it rather than just walking away and ignoring it.
I think the states are looking into this practice. I hope it changes. I didn't agree with it when they started it and I don't agree with it now.
~jifr!
2007-10-16 13:18:31 · answer #4 · answered by Jifr 4 · 1⤊ 1⤋
Insurance premiums should reflect the risk involved. If, for example, homeowners with bad credit ratings have more house fires than homeowners with good credit ratings (and, surprise, they do) it makes good sense to charge them more.
2007-10-16 12:20:54 · answer #5 · answered by Anonymous · 2⤊ 0⤋
Insurance companies are the biggest scams going, so it doesn't surprise me. Think about the nature of their business and how they can actually have laws passed to make you buy their service with no intention of ever paying you back. We need a better system.
2007-10-16 12:27:39 · answer #6 · answered by Anonymous · 1⤊ 2⤋
I don't agree with any practices of the insurance companies.
2007-10-16 12:23:30 · answer #7 · answered by Anonymous · 1⤊ 1⤋
It is their business.
I moved one mile into a different zip code---
The car insurance jumped $180.00. For the
exact coverage that I had just paid for.
2007-10-16 12:20:39 · answer #8 · answered by Fred F 7 · 1⤊ 1⤋
I have heard this. It's very lame. I wonder if they've ever heard the saying "There are 3 kinds of lies: Lies, damned lies and statistics."
2007-10-16 12:21:01 · answer #9 · answered by ditzydevil82 2 · 1⤊ 1⤋
Anything they can do to make a dollar. They will do. They should not have access to your credit rating.
2007-10-16 12:20:00 · answer #10 · answered by Anonymous · 1⤊ 3⤋