Do you feel it's discrimination that insurance companies use your credit to determine your rates????

Question

REO, YOu rock great answer!!!

THey suck

Answer 1

Absolutely! The whole credit score system needs to be re-invented. For example, when I got my mortgage on my house I had my credit pulled several times by several lenders so i could get the best rate, of course. Now, I have all these inquiries that will be on my credit for 2 years. Plus, there are mistakes that take forever to fix. Insurance companies cannot base what kind of driver you are with what kind of credit you have. I swear it is a scam. Also, wtf is up with them checking you credit when you apply for a job? That is unethical! Prime example, my husband had not the greatest credit when he started his job out of college, he got a job with a large company that he is moving up very fast in and the company loves him! So, if they had based his hiring off of his credit they wouldn't have hired him. When in fact, he is the best person for the job! I hate this system, I wish I could figure out a way to abolish it for any other use besides loans or credit! Wrong, wrong, wrong!!!!!

Answer 2

Nope. Lower credit rating generally means higher risk of default (and losing money for the non-payment of the customer's monthly premiums). It also tends to go hand-in-hand with less-responsible behavior, which tends to be a greater risk that the customer will file costly claims against the policy. Insurance companies hire teams of math whizzes to calculate these risks on an on-going basis.

These are general correlations, of course, not hard and fast rules. But it's not fair to make the other customers pay the higher costs associated with these financial risks. The people who bring the higher risks should bear their own higher burden. (It also gives them the incentive to work to lower their own risks, which benefits everybody.)

Answer 3

I hear in prior comments that its not discrimnation because the credit score is from your choices. I disagree partially because what about cases of identity thefts, etc. Also just because studies show people with lower credit scores are more of a risk is crazy. I could do a study and find something else in common for bad drivers. For example, People who eat cheeseburgers are higher risk. Its all crazy.

Answer 4

You've obviously never been responsible for running a business, or you would know better.

You've never known a family whose primary bread-winner died suddenly, uninsured, leaving a wife and 3 or 4 young kids without any way to avoid bankruptcy and lives of poverty.

And you've never considered what would happen if you bought a new car that got totaled before you'd finished paying it off. Without comprehensive insurance, you'd be both ride-less and penniless (and date-less, too) for years to come.

Answer 5

No I don't feel that it is discrimination, there is a direct correlation with irresponsible people making irresponsible driving choices, which is why the insurance industry legitimately reviews credit information.
AND FYI: not all reports that insurance companies make directly effect your credit score or are based solely on your credit score.

Answer 6

Insurance companies use statistics to determine risk. If statistics were to show that people with good credit are more accident prone, then you would get a discount for having bad credit. I don't think that is the case, though.

Chances are, poor credit indicates a higher risk. It certainly would increase their risk of not getting paid.

Answer 7

no its not, they the insurance company is a lender also, they are loaning you a policy with a promise to pay in full, they want to be sure you are going to pay your premiums, and they want to see how you handle your financial obligations, the charts show those that handle their financials properly are less likely to have hugh or multiple claims therefore they are entitled to a reduced rate, whereas those who dont have more claims and reap what they sow a higher rate. its all in the numbers and past history, so play the game accordingly, its the same for interest rates, you dont have to be well off to handle your obligations apprpriately, just smart enough to realize the value of good credit and act accordingly

Answer 8

Here are some frequently asked questions about insurance.

Answer 9

No, they have to set price to cover the risk of non-payment
if a person pays 1st month they must be covered for 60 days in most states 90 in some even if non payment. (on Auto)

Some bed eggs make it tough for others!

Answer 10

Discrimination? No, because your credit score is something you have earned based on your own personal choices, good or bad. Its not something your born with or can't be changed.

Unfair? Absolutely.