Rep. Jim Gooch has filed a bill that would limit how much auto insurance companies could raise rates on drivers with bad credit.
Insurers have overwhelming evidence that drivers with bad credit are more expensive risks behind the wheel. The American Legislative Exchange Council issued a report back in 2003 finding bills like this increased insurance costs for drivers with good credit:
"A prohibition against insurance scoring would concentrate benefits among a relatively small group of high-risk individuals who would be relieved of the burden of paying insurance premiums that are commensurate with the risk they present. It would accomplish this at the direct expense of a larger group of low-risk individuals, who will pay more than they would if insurance scoring was allowed."
A similar but more restrictive bill failed to get a floor vote last year.
4 comments:
Why is there even a link between credit rating and driving ability. So does that mean that all those who are soon to be unemployed are now suddenly a bad driver risk because they lost their job and can't pay their bills?
There is a link because research shows people with poor credit tend to be expensive drivers to insure. People with sudden drops in income can keep their credit from being trashed by talking to their creditors. Either way, politicians have given us little reason to believe they are better at accurately measuring driver risk than car insurance companies are.
I disagree with your statement, "People with sudden drops in income can keep their credit from being trashed by talking to their creditors." Creditors don't care that you have a sudden drop in income, they just want the cash and you still haven't answered my question. How does credit score (a number that is calculated with a secret algorithmic equation) translate to poor driving ability.
Are you saying that you don't like the fact that insurers have found a link between bad credit and bad driving or are you saying that there isn't one?
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