The economy is in a down turn and it is important for people to be insured. The state of Massachusetts has now made it illegal for auto insurance providers to use a person’s credit score when underwriting their insurance policy.
This is great news for Massachusetts drivers because many people in the state are unemployed or deep in debt and have low credit scores. For years, many residents have argued that there is a line between being a responsible driver and being someone who is financially responsible.
A credit score is made up of many different things. This includes a person’s amount of debt, number of open accounts, and their payment history. Sometimes people fall on hard times which is what is going on right now so they cannot pay their bills so their credit score drops.
This does not mean that everyone who has a bad credit score is a terrible driver or will engage in reckless behavior behind the wheel.
Auto insurance companies have stated for years that they believe that they should be able to use a person’s credit history when deciding whether or not to write a driver an auto insurance policy. Most drivers who have poor credit scores have to pay more for their auto insurance premiums because they are seen to have more risk.
Other states might follow the state’s lead because so many people are unemployed right now. It is important for as many people to have auto insurance coverage as they can in the United States.
If people have to pay more for their auto insurance premiums because they have a low credit score then people will not get insurance coverage. It is kind of a lose-lose situation for auto insurance companies in other states. If they penalize people who are deep in debt by giving them higher premiums then those people will go to providers will less stringent rules or just not be insured at all. This in turn shrinks the client base that each insurance company has.
It is important for consumers to reduce the amount of risk that they have. Always follow the rules of the road, never let your coverage lapse, and always be sober when behind the wheel of a car.
Sources: NU Online News Service
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Autumn Cafiero Giusti is a licensed insurance broker and seasoned journalist who specializes in breaking down complex auto policies into clear, actionable advice. At CheapCarInsurance.net, she focuses on helping drivers compare local insurance rates, understand state coverage requirements, and find affordable car insurance tailored to their budget and location.