Bill aims to stop use of credit history to set home insurance rates
»Play Video
Insurance companies insist that how we pay bills and manage credit is one valid predictor of how likely we'll be to file a claim against our homeowners insurance. It's known as insurance credit scoring. Insurance Commissioner Mike Kreidler wants the practice stopped.
Check out TVW online and you'll see who showed up to support -- or block -- House Bill 1212 at a January 30th hearing in Olympia. HB1212 would prohibit insurance companies from using credit information to deny or set rates for homeowners insurance. The insurance lobby is lined up in opposition.
"There's only one state in the country that statutorily bans the use of insurance scoring in one line of insurance or another," said Kenton Brine with the Property Casualty Insurance Association of America.
"We feel pretty strongly that the use of this tool actually does allow for fairness in the pricing of homeowners insurance as well as automobile insurance," added Jean Leonard, who represents State Farm and Nationwide Insurance.
"Farmers Insurance is in strong opposition of House Bill 1212 because it is going to take our entire underwriting system in terms of how we derive our rating models, and turn it on its head," explained Jessica Harbin, a lobbyist for Farmers Insurance.
But Kreidler says thousands of homeowners have contacted his office to complain about premiums being raised for "unfair" credit reasons, such as consolidated credit, self-canceled credit cards, a major credit purchase using deferred interest, getting a new credit card for frequent flyer miles, or not having enough active accounts.
"Why should something like credit be used that way?" Kreidler asked.
Past efforts to change existing law regarding insurance credit scoring have died to partisan opposition. But supporters say a key difference this year might change things, because the bill's sponsor, Rep.Cary Condotta of Wenatchee, is a Republican.
"As a person's credit rating changes, does it really increase the likelihood that their house is going to burn down, or there's going to be a liability issue? I really seriously doubt that," Condotta said.
For the first time, the move to prohibit use of credit history in setting certain insurance premium has bi-partisan support. In order to move forward, HB1212 must be voted out of the House Business and Financial Services Committee by February 22nd.
".... Insurance companies insist that how we pay bills and manage credit is one valid predictor of how likely we'll be to file a claim against our homeowners insurance ...."
Â
BULLSH##!!!
Â
I have NEVER in my entire adult life filed any sort of property, liability or casualty claim - 35 years. Yet, using their *logic*, I would be a high risk now because I filed for & was granted bankruptcy, due to medical expenses in excess of $250,000 AFTER insurance.
Â
It's just another way they try to take as much from you as possible in premiums, and then cancel you as a bad risk if you should ever need to actually USE the insurance.
Include all insurance and I'm for it. Most smart people get their home and auto from the same agentcy. If they check for auto how could we prove they did't use it for home insurance?
My credit score has come and gone and come again. Â However, I've NEVER made an insurance claim auto or home wise. Â It should in no wise be attached to my credit score. Â For one, a person pays the dues, they have insurance. Â It's that simple. Â You don't pay, you lose it. Â More problems are actually due to people adding insurance to a vehicle then cancelling as soon as the card comes. Â That should go on a person's insurance history. Â Rates should be affected by a person's track record with the company and their driving record, not their credit.Â
"...As soon as the card comes." Â I meant the insurance card, not the credit card.
So does this mean I would have to pay a higher rate because those that frequently (or would be more likely to) defraud the insurance agencies, would go unnoticed? The cost would shift somehow.
My credit rating gets used ALL the time. Homeowners insurance should be exempt? Seriously?
Why do we even have it then?
Â
Let's just abolish all credit scores and give money to anyone that wants it.
Oh, wait... We tried that. It caused the housing crash, so let's do it again.
 @bobalouie The only thing I got about your post was your name (my cat of 17 years was named Bobalouie and this was the only place I've ever heard of it).
Â
We have a credit rating for loans, not for insurance purposes.
 @bobalouie They use a different metric called CLUE. You think fixing an error on a credit report is interesting, try even getting a copy of your CLUE report.
Â
I love reading your posts, it must be very difficult going through life being so - perfect and free of any flaws.
@Howard Beale:Â
And what most do not know about CLUE is that you do not even have to FILE a clim to get listed as a "liability" there. Simply inquiring with a hypothetical can get you listsd.Â
Â
Say Joe Homeowner calls his insurance because of some "minor damage" that is probably covered under his homeowner's policy. He asks about coverage for it, to determine if it is really worth filing a claim (since he has deductible and such that comes out of his pocket). In the end he decides NOT to file a claim. But with CLUE< it is STILL listed the same as if he HAD filed a claim.Â
Â
Talk about a perverse system. Damned if you do, damned if you don't, and you pay for the priviledge either way.
Go Mike!!! Â The insurance companies are way out line, as usual. Â Your car insurance, your homeowners, contractors bond etc., should be based on the amount of claims you submit. Â The only exception that makes sense is the driving record for car insurance as that is directly related. Â Insurance companies will always try to find any indicators of what might occur to allow them to raise rates. Â For example, forcing you to purchase car insurance for every person living in your house who has a drivers license.....it is nothing more than shameful greed!
Â
I saw my car insurance bill go up dramatically despite having an awesome credit score AND never had any accidents. Â This system is full of holes. Â I was so disgusted with it, that I planned by life by moving close to work and all the shopping I could ever need, then dumping my vehicle. Â To hell with insurance company tactics like this. Â I won't participate.
Good, but don't stop at home insurance!
Sorry but if you have really bad credit you are probably a bad insurance bet. If this goes through you can bet that all peoples insurance will go up to pay for those that are bad credit risks. The more the government meddles in privet business the more it will cost all of us for the basic services that are provided.
 @bustedupredneck Yeah cause we have never heard of people being forced into bankruptcy over medical expenses.  They sure seem like they would be a risk.  Or those that lost their jobs and subsequently their homes.  Yeah they seem like real risks too.  How about we insure for coverage rather than a past that has no bearing on future claims. Â
 @bustedupredneck Spoken like someone that has no understanding on the intricacies of what impacts credit score up and down.
Â
For example, if you pay everything with cash because that is your choice, and you have a thin file, you will have a low or maybe even no score. So seriously, you should pay more for insurance because you operate on cash.
Â
Close a credit card account down because you don't need it? That could whack your score 50 even 75 points (surprise) because it could impact either your available credit, or the average age of your accounts, or if it is listed wrong as, "closed by creditor versus closed by customer."
Â
And remember, it needs to be right on all three reports. So if you have some old credit card you don't use, and you decide to close it because the program isn't all that good - you could actually drop your score, significantly. So that means you have bad credit because again, you did the right thing???
Â
OK...what ever you say.
 @bustedupredneck Get a clue!