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, and investment firms to handle banking, insurance, and investment operations.
Car Insurance Be Affected By Your Bad Credit History
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 economic 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), and 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 database 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 makes 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 have 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.