The policy holders in the gulf of Mississippi know for sure that there is in the hike in the rates of insurance but what they don’t know is that to get home loans or auto insurance, their credit scores are factored!
Consumers who have faced financial difficulties are looking at high premiums for home and auto insurance loans because of the economy. But it is said that there can be hikes in report even due to errors in the reports. Mike Chaney, the commissioner of insurance in Mississippi also says that he saw a 10 % increase in his rate of insurance because of mistake made by the insurer.
Based on his good history, he questioned the charge. That’s when found out that there was an error.
The advocates of consumers ask the insurance companies of the accuracy in this method. They ask if this correlation between risk and credit is completely right. They also ask the industries to use relevant indicators such as credit and claim history and condition of the ‘to be’ insured property. Chaney said that some insurance companies hike tier premium rates based on the credit information provided to them without being approved by the state. Chaney says that for them, it’s the money that matters.
Auto mobile policies are risked by credit scores showed a study by the federal trade commission in 2007. the insurance companies say that those customers who have high credit scores are given lower premium rates, they determine the rates, partly based on the credit .
Robert Hartwig says that if you are responsible about your finances managing them well, you also become someone who wouldn’t meet with accidents much. You would be someone who follows all rules and obeying them with speed limits. this would ensure a good maintenance of your car. Insurers check credit scores just to check if they are responsible enough.
Former Texas commissioner, Robert hunter does not believe the correlation factor between credit report and risks. He says that FTC only took numbers that the insurers provided.
He says that this hits the lower income group more as they won’t be able to afford homes with such high premiums especially when the economy is this bad.
“They put this bill out all over the country and the insurance companies behind the scenes were pushing it and publicly were saying, ‘Oh, this is terrible, they’re going to regulate us,”’ Hunter said. “And almost every state adopted this thing because it was a way for legislators not to risk losing insurance company financial support and look like they were voting for something”
your credits score differs from one company to another. And most consumers still don’t know why their premiums are high.