Credit Based Insurance Scoring
Did You Know . . .
1) Many Oklahoma insurance companies use an insurance score to determine how much of a risk you may present.
An “insurance score” is a rating based in whole or in part on a consumer’s credit information. Insurers that use credit information to rate risks use insurance scoring models to evaluate credit and other information and ultimately assign a score to a consumer that will factor into the rate that consumer is charged. Insurance scoring is only applicable to personal insurance, which includes but is not limited to, private passenger auto, homeowners, motorcycle, mobile-homeowners, and personal watercraft.
2) A policy of personal insurance can not be denied, canceled, or non-renewed solely on the basis of your credit information.
The Insurance Code requires that insurers consider underwriting factors independent of credit information before denying, canceling, or non-renewing a policy of personal insurance. However, insurers may not factor in your income, gender, ethnic group, marital status, religion, address or zip code. The same restrictions apply to determining renewal rates.
3) If an insurer takes adverse action against you based upon credit information, you must receive notice of that action.
This notification requirement is found in the Insurance Code and requires that the insurer explain the reason for the adverse action in clear and specific terms. General reasons such as “poor credit history” or “poor insurance score” do not satisfy the notice requirement.
4) Upon annual renewal of your policy of personal insurance, you can request that the insurer re-rate your policy based upon current credit information or your current insurance score.
The Insurance Code requires that the insurer honor this request to re-rate and re-underwrite the policy. Insurers are not required to recalculate your insurance score or to obtain updated credit information more than once during a twelve-month period.
5) Requesting a copy of your credit report can not negatively impact your insurance score?
Insurers may not use credit inquiries made by you for your own information in insurance scoring or evaluating credit information. Insurers are also prohibited from considering inquiries of your credit information that are not initiated by you in determining your insurance score or evaluating your credit information.
6) Under certain circumstances, shopping for a home mortgage, within a certain time amount of time, can not negatively impact your insurance score?
If you are shopping for a mortgage, several potential lenders may inquiry into your credit information. These are called “multiple lender inquiries” and are uniquely coded by consumer reporting agencies to identify them as such. If the inquiries are properly coded and made within thirty (30) days of each other, insurers can not treat them as negative factors in insurance scoring or in evaluating credit information, unless only one inquiry is considered. The same limitations apply to shopping for an automobile loan.
