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IGoZoom, when did insurance companies start using FICO scores to help determine rates? I'm guessing they have found a correlation between high credit score and more responsible driving. But what if that is not the case?
Technically, they don't use a FICO score and they're VERY careful to call it a "credit-based insurance score". Each insurer has their own proprietary model to calculate risk based on the specific pieces of credit information they specify and the weight they assign to each. Usage of credit information dates back as far as the 1990s, but became much more common in the early 2000s. By 2010, over 90% of insurers were using it for underwriting purposes on all policies.
There have been several extensive studies conducted to establish a definite link between certain credit criteria and claims frequency and severity. All of them proved that there was a link, but a fairly minor one. Still, insurance companies use this to support the surcharge on policies for those with less than stellar credit.
A few states, including California and Hawaii, have banned the practice. It is often argued that the poor are disproportionately penalized and I don't disagree with that.
Personally, I don't think that credit history and claims are directly related. Income and claims are directly related and insurers are using credit information as an indirect substitution for income. For a low income driver, a $1200 accident would likely mean filing a claim. For a higher income driver, especially if they have a $500+ deductible, paying for the accident without involving the insurance company is a more realistic possibility.
I have 100% clean record, I haven't had a single violation, accident or ticket in 10 years, other than parking; excellent credit. However, I'm not giving them my SSN or DL info, because I just want to compare the basic info from one state to another with identical info. I'm going to speak to an agent next week.
I've also been with Progressive for 3 years without any accidents or ever needing to use insurance (I've cancelled them 2 months ago because I sold a car), do you think that may lower the standard rate? Thanks for the input!
If you have a break in coverage or currently are not insured it will raise your rates.
In California auto insurers have to file their rate sheet with the state. Using it you can compare rates among different insurers, the only downfall is you can't put in your specific characteristics you can check rates for categories such as male/female, age miles driven and category of vehicle. It's interesting to look at the results for full coverage for a male driver with 9-15 years driving experience, 7,500-10,000 miles F150 truck, zipcode 95608. The lowest is IDS which is the parent company of Ameriprise which is sold by Costco with an annual $952, the highest is National General with an annual premium of $3788. I don't know if Texas has a similar online database but if they do, it might prove useful https://interactive.web.insurance.ca...::P11_SUBMIT:Y
I moved to Texas from Missouri and my insurance doubled.
Texas has a LOT of uninsured drivers and people drive more here, so that means higher rates. Also, the northern part gets tornadoes and hail storms.
Does California penalize you for not having insurance? Some states fine you DAILY for not having insurance. Texas doesn't do anything unless you are caught by the cops.
I moved to Texas from Missouri and my insurance doubled.
Texas has a LOT of uninsured drivers and people drive more here, so that means higher rates. Also, the northern part gets tornadoes and hail storms.
Does California penalize you for not having insurance? Some states fine you DAILY for not having insurance. Texas doesn't do anything unless you are caught by the cops.
In California, they cancel your registration, if you don't have insurance. They send a notice that the registration is suspended, and that you need to provide proof of insurance to get it reinstated. Of course people can still continue to drive anyway. But it's in the system, that the car's registration is suspended. The car is then impounded, if any cop runs the plate number.
In California, they cancel your registration, if you don't have insurance. They send a notice that the registration is suspended, and that you need to provide proof of insurance to get it reinstated. Of course people can still continue to drive anyway. But it's in the system, that the car's registration is suspended. The car is then impounded, if any cop runs the plate number.
That's more than what Texas does. Texas has TexasSure, but it's only a database to allow law enforcement to check insurance status. You'll be fine driving without insurance unless you are stopped by law enforcement.
It really depends ont he market. Why is Ohio the cheapest while right next door, Michigan is the most expensive?
In part because Ohio managed to attract nearly every carrier and there is a lot of competition, in part because Michigan has stupid long term disability mandatory insurance which is pricey and mostly benefits insurance companies, I think another part might be the fact that Buckeyes are generally dreadfully slow, painfully cautious, drivers while Wolverines are almost ridiculously fast and everyone tailgates all the time.
Every state has different requirements and different factors that impact insurance. It seems hard to believe, but it is possible Texas may have more drunk driving. It has higher speed limits. Also in California every two years you get one ticket for free with no insurance increase. If Texas does not do that, you will have higher rates because more people will have tickets on their record.
Another factor might be that Californians mostly sit in their car and read the paper on the freeway while the Texans are shooting along at 85 mph. An 8 mph accident will be far less damage than 85.
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