Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
People who having better credit scores tend to be more responsible and a better "risk." Conversely, those with lower FICO scores may well have 'earned' their score by not paying bills on-time. Some people don't have an established credit score so they can get penalized unjustly.
Young drivers tend to be more aggressive behind the wheel and, as a result, are in more accident that mature drivers. Of course, if you "too old" then that counts against you with some companies, possibly due to motor skills (and driving ability) deteriorating.
Married folk? Again, do an assessment of all drivers/violations/accidents and it likely points to those who are married being a lesser risk than single people. Insurance is largely about risk. The higher the risk, the higher the premium. On an individual case bases each of the above examples may be inaccurate. But insurance uses the rule of large numbers - companies generalize when assessing large groups of people. Best rates go to the groups seen to be the preferred risks
People who having better credit scores tend to be more responsible and a better "risk." Conversely, those with lower FICO scores may well have 'earned' their score by not paying bills on-time. Some people don't have an established credit score so they can get penalized unjustly.
Young drivers tend to be more aggressive behind the wheel and, as a result, are in more accident that mature drivers. Of course, if you "too old" then that counts against you with some companies, possibly due to motor skills (and driving ability) deteriorating.
Married folk? Again, do an assessment of all drivers/violations/accidents and it likely points to those who are married being a lesser risk than single people. Insurance is largely about risk. The higher the risk, the higher the premium. On an individual case bases each of the above examples may be inaccurate. But insurance uses the rule of large numbers - companies generalize when assessing large groups of people. Best rates go to the groups seen to be the preferred risks
I am very curious why FICO, age, and marital status are determining factors in being approved for insurance?
I'm sure many people will take issue this, but single people have more disposable income. The insurance companies know they can get more money from them, so they do.
Same reason, senior drivers, who are the worst possible drivers on the road, get low rates. Everybody knows that they have less money so every business has got to have a senior discount.
I'm sure many people will take issue this, but single people have more disposable income. The insurance companies know they can get more money from them, so they do.
Same reason, senior drivers, who are the worst possible drivers on the road, get low rates. Everybody knows that they have less money so every business has got to have a senior discount.
I am a senior and have kept excellent rates by adjusting for my age. I do not use freeways and avoid roads with difficult driving issues such as complicated intersections.
Seniors tend to drive fewer miles and are safe unless serious health issues arise.
I am very curious why FICO, age, and marital status are determining factors in being approved for insurance?
I find it curious that two blind persons can own a car and get it insured, but a blind female has a very difficult time finding an insurer.
It is the same in the doctors office too.
I personally have some issues with credit scores being used to determine insurance rates. However, it doesn't change the fact that most companies do use them and until the law changes there is nothing you can do about it other than try to improve your credit score.
Age? Are you serious? Drivers in the 16 to 25 year group and drivers older than age 80 account for far more than their share of accidents. Of course, age is a factor in determining car insurance rates and it ought to be.
Marital status? There is some research that indicates married men are more likely to lead a more "settled lifestyle" and be more cautious than single men are. This makes them safer drivers. My own experience validates much of this research.
I realize that a young single man who drives responsibly can see all this as unfair. I am hard pressed to think of a time when I cost the insurance companies any money because of a claim from age 16 to 25. I even qualified for good student discounts continuously until I graduated from law school when I was 24. Yet, my insurance rates were sky high. Its unfortunate, but if you are in this age group, no matter how personally responsible you are, you are going to pay a lot for car insurance. Its because the insurance company's experience with this age group of drivers is a bad experience in terms of claims made and dollars paid out.
Credit based insurance scoring is prohibited in my state so they do not run my FICO when applying for insurance.
As for age, it doesn't take a genius to know that 40 year olds are better drivers than 18 year olds. Statistics prove it. Not saying there aren't older idiot drivers but overall they are safer so less risk to the insurer.
Being married could mean that you have your wife and kids in the car with you meaning you'll be less likely to drive like a maniac so less risk to the insurer.
FICO also gives a very clear picture of ones attitudinal risk. It might not be exact for everyone, but the law of large numbers, it shows that it is highly predictive of future losses. Meaning...if you are irresponsible in your financial life...there is a positive correlation that you are not responsible in many other areas too.
Keep in mind though, this is only one aspect of the algorithm.
FICO also gives a very clear picture of ones attitudinal risk. It might not be exact for everyone, but the law of large numbers, it shows that it is highly predictive of future losses. Meaning...if you are irresponsible in your financial life...there is a positive correlation that you are not responsible in many other areas too.
Keep in mind though, this is only one aspect of the algorithm.
My principal objection to the use of FICO scores as a basis for determining insurance premiums is that it discriminates against the poor.
True, one can have poor credit because one leads an irresponsible lifestyle. However, one can also have poor credit because of health problems, a divorce they didn't plan on, being laid off from a job they were doing well, or a host of other reasons that either don't involve fault--or minimally involve it. Bad credit has nothing directly to do with poor driving. I suppose one could arrive at a correlation between men who have long hair and are involved in accidents more often than short haired men. What if being in the military was correlated with a higher percentage of accidents than not being in the military? Would that justify higher premiums for those who serve their country?
If I had my way, I wouldn't let insurance companies use it as a tool to determine insurance premiums. I'd pass a law against it.
My principal objection to the use of FICO scores as a basis for determining insurance premiums is that it discriminates against the poor.
True, one can have poor credit because one leads an irresponsible lifestyle. However, one can also have poor credit because of health problems, a divorce they didn't plan on, being laid off from a job they were doing well, or a host of other reasons that either don't involve fault--or minimally involve it. Bad credit has nothing directly to do with poor driving. I suppose one could arrive at a correlation between men who have long hair and are involved in accidents more often than short haired men. What if being in the military was correlated with a higher percentage of accidents than not being in the military? Would that justify higher premiums for those who serve their country?
If I had my way, I wouldn't let insurance companies use it as a tool to determine insurance premiums. I'd pass a law against it.
In your response you write about credit and driving...point of clarification, one can have a claim without bad driving, so that's not entirely what is being underwritten. The prediction of future claims based on past experience is.
Very hot topic...especially for those that have poor credit.
Poor people that handle their finances could have a very good credit score, while people with great income but live outside of their means could have a very poor credit score. Again, this is the attitude that is being considered.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
