Insurance Companies are using your Credit Score

You may not be aware of this, but there are somethat? Do they have to add insult to injury by saying
unfair rating tactics being utilized by auto insurance"your credit score sucks too," and triple the price for
companies that the public isn't even aware of that arethe insurance?
not only discriminatory, but are helping to boost theWell, yes, they have to, if they want to make
insurance company's profitability.truckloads of money. Allow me to explain. The
I'm a New Jersey resident, and if you're a New Jerseyinsurance companies say that they are justified in using
resident, you've noticed that over the past 2 years,a credit score to determine the price of auto and
many of the insurance companies that sprinted fromhome insurance because it reflects how responsible
the state during the 1990's have returned with theirthe person is, and it enables them to gauge how
arms wide open, ready to accept your money oncesusceptible that person is to having an accident or
again. GEICO is back, Progressive is back, and all ofburning their house down.
the other companies have ramped up their advertising,However, this does not justify giving a person with a
as laws have been passed in New Jersey to mirrorhigh credit score a policy that is 200% or sometimes
the laws already passed in other states to motivateeven 600% cheaper (as is the case with certain home
the insurance companies to come back. There is oneinsurance companies) than someone whose credit
law in particular that has been passed in New Jerseystinks. If insurance companies wanted to jack up the
that has been legal in other states for quite some time.rate by 30% if a person had a credit score below 600,
It's making New Jersey residents, the few that knowthat would be fair. But that's now what's going on. The
about it, furious.insurance companies are profiteering, plain and simple.
If you are a New Jersey resident, you are very likelySo, the rich get richer. The people with the most
not aware of this, so this should especially interest allmoney get the biggest discounts, and the people with
of you Jersey-ites. If you're not a New Jersey resident,the least money pay ridiculous premiums, sometimes 3
you also may not be cognizant of what I'm going toor 6 times more than the rich guy, even though they
reveal to you, so this should interest you as well.may have no marks against them on their motor
Here it is: insurance companies in New Jersey are nowvehicle report and have never filed a homeowners
able to use your credit score to determine the price ofinsurance claim.
your auto and home insurance. The better your creditI agree that a person's credit score does tell you
score, the steeper the discount you will receive. Forsomething about the person, and it should be legal to
those of you with credit scores below 600, Ouch!use that score for underwriting purposes, but that does
This infuriates many people, because if they have anot entitle the insurance companies to use it in the
perfect driving record with no accidents or violations,manner they are. The insurance companies are
but have an adverse credit situation, or a slightly lessmaking huge profits on those customers with lower
than desirable credit score, they have to pay more forcredit scores, who are paying through the nose and still
their insurance, whereas the rich guy who doesn'tnever filing a claim or having an accident.
need the discount pays 50% less or sometimes 300%It's simply not fair, but it's perfectly legal. State
less than you because he's rich.governments needs to set limits on the increased
What could possibly justify this? Can't insurancepremium charged to those who don't have a stellar
companies simply evaluate a person's driving recordfinancial record. Certainly, the insurance companies are
and the quality of the territory in which they live tonot going to regulate themselves.
determine what the rate should be and leave it at