You know that credit reports rule almost every aspect of our lives, from the ability to obtain a simple store credit card to buying a home. Insurance is no different, and insurance companies have a specialized report called CLUE that determines how they measure your risk. CLUE stands for Comprehensive Loss Underwriting Exchange, and is a service of Lexis-Nexis, where they offer a number of risk assessment tools for a variety of insurance policies, of which auto is one.
The information provided is the policy holder’s name, date of birth, policy number, and information about claims such as such as types of loss and amounts paid out. It is essentially a type of credit report, but very few people have ever heard of it until now. As it is consumer information – just like your credit reports from TransUnion and Equifax – you have the right under the Fair Credit Reporting Act to obtain a copy of the report and dispute the information if it is inaccurate.
Along with your CLUE report, you credit score can also affect your premiums. Insurance companies have determined that your credit score accurately reflects what risk category to which you belong. Late payments, defaults, judgements, garnishments, and even bankruptcy or divorce can negatively impact your score. In short, if you are a good driver with a clean CLUE report but a low credit score, you are going to pay higher premiums than someone with a clean CLUE report and a good credit score. Because the surveys done to date have not been sorted by demographic groups, it is not known if the practice constitutes a form of “redlining” against poor communities. However, the FTC notes that it is more likely that black and Hispanic people could be paying more that white or Asian people across the board.
Now, there is some hope from the Legislature.
Chapter 626.9741 of the Statutes “regulates and limits” the use of credit scores for underwriting purposes. It applies to motor vehicle insurance and personal lines of residential insurance including mobile homes, tenants, and your standard homeowners policy. It also very liberally defines what credit scoring means. Under the statute a credit score is derived by using data from a credit report in any process for the purpose of grading and scoring consumer data. Your insurance agent must inform you that a credit score is being requested, and that if you are denied insurance based upon the outcome of that credit report the insurer must provide at no cost a copy of same. Furthermore, and insurance company may not deny insurance solely because of the information in that report without considering any other factors.
At E&L insurance, our independent agents are always looking out for you. We want you to have the best possible coverage to protect you and your family, whether it is auto, home, or business; at work or at play. Call us today to find out how hard are agents will work for you, to get you the best possible coverage at the best possible price.