Can Car Insurance Be Affected By Your Bad Credit History?
By: Joseph Kenny
If you have bad credit you can be denied car insurance! The protections
afforded to the consumer since the Depression of 1929 no longer
exist. The Financial Laws passed through Congress in 1992 allowed
banks, insurance companies, investment firms to handle banking,
insurance and investment operations. Laws passed after 1929 had
prevented banks from insurance and direct stock exchange trading,
likewise insurance companies could not pursue banking operations
or stock exchange nor could stock exchange companies pursue insurance
or banking operations.
This freedom was granted without the subsequent protections of the
consumer included in these new laws. There currently exists no single
body of consumer law covering the privacy of consumers. The private
citizen must fight the triumvirate of bank, insurance and stock
exchange through the court system for his own right to privacy.
Some states have allowed the use of individual credit to be a determining
factor in the issuance of car insurance. However, two such states,
Texas and Michigan have institutionalized state agencies to meticulously
govern and manage those insurance bodies. These states have a socialized
automobile security plan where individuals having bad credit or
low income jobs can obtain economical coverage or liability car
insurance.
True, each has rather strict guidelines by which a motorist can
qualify for low cost insurance. However, this is a two edged sword!
The performance characteristics of every insurance agency and company
are meticulously maintained. These involve the speed with which
legitimate claims are processed by the insurance company, customer
satisfaction (both client and claimant), conformity to state and
federal laws. A performance index is issued for each firm and their
respective insurance costs are compared with both a state and federal
cost per coverage. The state has created its own actuarial data
base to evaluate insurance coverage. The motorist can freely view
these to determine the best coverage for his situation. The consumer
is given power that the insurance vendor can appreciate and respect.
This fact may give some satisfaction to the average motorist but
some of us still want to know how good or bad credit make a motorist
a good risk or a bad one. Perhaps it is an honesty issue! If I have
good credit then I will always obey the rules of the road and none
of life's bad things will touch me. Does good credit mean that you
can avoid being hit by a drunken driver, avoid having your car pushed
off the highway into the nearby lake or have hail storms miss you?
I can understand where the honesty of making constant insurance
payments would be reflected in your credit but how does it establish
insurance rates?
Reviewing the Report to the 79th State of Texas Legislature, 2004
I discovered that insurance was not denied because of a bad credit
score but that it could be a higher premium because of poor credit.
Statistics showed that people in the 30 year age group has the worst
credit and the greatest vehicle damages reported. My conclusion
would not be that bad credit makes you careless. Rather my summation
is that youth and proneness to erratic behavior was the cause. The
point here is that there is no direct causal relationship but at
the strongest an inferential connection.
Joe Kenny writes for www.financefool.co.uk/,
who offers car
insurance providers in the UK. Visit: www.financefool.co.uk.
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