There are many factors underwriters consider when offering coverage for car insurance. These factors include your age, gender, location, driving record, the make and model of the car, and your credit score.
Location plays a vital key in determining car insurance rates. Those who reside in rural areas will definitely pay a lower rate while those who reside in the city pay much more. Logically, cities have higher populations and therefore incur more accidents, thefts, and claims.
Houston is the largest city in Texas with a population of over 2 million. With such a dense population, car insurance rates are bound to be significantly high, but also added to the equation is your personal credit score.
It has become an increasing practice for auto insurance companies to use your FICO score when determining the amount you will pay for car insurance. And although an insurance company cannot deny you coverage solely based on your credit score, it is acceptable to charge you more should you have poor credit.
So what does this mean for Houston's insured? For one, you'll pay a higher car insurance rate because you reside in a densely populated area. And if your credit is poor, you'll pay a higher premium.
Having poor credit does not necessarily mean that you will incur more accidents, but insurance companies are using low credit scores as a means to determine who will submit claims and have more auto accidents.
Insurance companies believe that if you have a high credit score, you're less likely to file a claim and you'll pay your premium on time. The belief is if you pay your monthly premium on time and have a better credit score, then you're likely to be a better driver.
Insurance companies who exclude your credit score from their premium quotes are in the minority. However, as a Houston resident, you are entitled to know about your “Consumer Bill of Rights”.
Your insurance company is required to provide you with a summary of your rights under Texas car insurance law when it issues you a policy (which is called the "Consumer Bill of Rights").
You will find that an insurance company cannot deny you coverage based on your credit information and that the insurer must consider other underwriting factors separate from your credit information.
If the insurance company uses your credit information to make a ratings decision, they must provide you with a statement within 10 days after receipt of your application for coverage.
To learn more about the "Consumer Bill of Rights", contact ChiefClerk@tdi.state.tx.us or visit www.tdi.state.tx.us.