Posted On: August 25, 2008, 12:59 pm CDT

Posted By: Reality

Companies rate differently for multiple reasons, not just credit scores. To say that you rate the same risk in different companies and recieved different rates and blame that all on their credit scores is just plain ignorance. Everyone company has their own rating structure with different base rates and characteristic factors. They target their rates towards those customers they feel are the better risks.

Now for why I think credit scores and a very valid reason to rate. Other than the fact that it has statistically been proven that those with a lower credit score have higher loss ratios. What happens when someone repeatedly doesnt pay their insurance bill on time. The insurance company has to send out notices, follow-up with the customers, and follow many regualtions which may result in a policy cancellation. These things cost money. The policyholder that does pay their bill on time doesnt incure these expenses for the company. Also, if you don't pay your bills your not as likely to stay around as long. Anyone who has seen policy expenses knows that an insurance company doesnt really start making money on a policy until 4-5 years after it is sold. A higher rate for those that wont stay as long is justified. I wont even get into the higher chance of fraud with those customers who are having a hard time paying their bills and may just "lose" their car to get an insurance payout.