Got Poor Credit? Prepare to Pay Double (or Even Triple!) for Auto Insurance
October 19 2016 - 1:04PM
Business Wire
Study: Your Credit History Makes Big Impact on
Your Premiums
There is yet another reason to make sure you have good credit.
According to a new report by insuranceQuotes, credit has a
significant impact on what you pay for car insurance. Drivers with
poor credit often pay double, or even triple, depending on where
they live.
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(Graphic: Business Wire)
The study found that if you have fair credit, you’ll pay an
average of 28% more for car insurance than a driver with excellent
credit (up from 24% in 2013). And if you have poor credit, your
premium doubles, increasing your rate by 104% (up from 91%
in 2013) on average.
“What’s really concerning is that 42% of Americans aren’t aware
that there’s a relationship between credit and insurance rates,”
said Laura Adams, senior insurance analyst at insuranceQuotes.
“Over 95% of U.S. insurance companies use credit to set auto
premiums in every state except California, Hawaii and
Massachusetts, where the practice is not allowed.”
Unlike the more commonly understood consumer credit score, which
lenders use to predict how likely you are to repay a debt, a
credit-based insurance score (CBIS) helps insurers know how likely
you are to have an insurance loss and file a claim. The higher your
CBIS the less likely you are to file a claim and the lower your
rate.
These states see the greatest premium
increases
when credit drops from excellent to
poor:
These states show the smallest
increase
(excluding HI, MA and CA):
1. Arizona — 226%
2. New Jersey — 216%
3. Nevada — 213%
4. Nebraska — 206%
5. Oklahoma — 201%
1. North Carolina — 51%
2. Virginia — 75%
3. Wyoming — 76%
4. New York — 77%
5. Connecticut — 86%
“Insurance companies set premiums based on the information in
your credit history and typically use it only for an initial quote.
So consumers who have improved their credit over time should
request a new auto insurance rate in order to save money,” said
Adams.
“What helps boost your consumer credit—paying credit obligations
on time and not maxing out credit accounts—also helps increase your
CBIS and keeps your auto insurance rate down,” said Adams.
The full state-by-state report is available at
http://www.insurancequotes.com/auto/auto-credit-higher-insurance-premiums-101816
Methodology:
Quadrant Information Services and insuranceQuotes calculated the
average economic impact of credit on auto insurance rates using
data from the largest carriers (representing 60-70 percent of
market share) in each U.S. state and the District of Columbia.
About insuranceQuotes:
insuranceQuotes gives consumers a free, easy way to shop and
compare insurance quotes online for auto, home, health, life and
business. Follow on Facebook, Twitter, YouTube and Google Plus.
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version on businesswire.com: http://www.businesswire.com/news/home/20161019006226/en/
Media:For insuranceQuotesJacob Streiter,
646-695-7047jacob@rosengrouppr.com