Posted On: October 11, 2006, 2:11 pm CDT

Posted By: Jacqueline

I had a 24 yr old w/ a DUI from a year ago come in for a quote since she recently got her license reinstated and will be buying a car. Her quote comes out about only half as much as another customer of mine who is the exact same age, with a spotless driving record but who is very low income and hence has poor credit. When you don't have enough money to be able to pay your bills and meet your basic needs, which is the definition of being poor and low-income in the first place, of course your credit will be poor. So basically, those who have fallen on hard times and who are poor are paying more than they can afford for something required, while a previously convicted DUI who has a middle class income and/or family support gets a "free lunch".

I understand what you are saying about poor people having more difficulty paying their premiums and keping their coverage from lapsing or cancelling. But those carriers who go through independent agents simply back-charge the agents the commissions on these lapsed/cancelled policies so how much are they really out? Furthermore, if the poor were not being charged 40%-50% more than their middle-class counterparts with the good credit - hence charged far more than what they can afford, maybe they wouldn't be going without coverage and letting their policies lapse due to inability to afford it.

Now people are creatures of habit. So I am a bit skeptical on this credit scoring business because someone who has exhibited a record of careless driving habits is alot more likely to cause a loss and when they do, they have as much of a chance of causing a loss to an affluent "claims conscious" person as they do to a poor person who would have to be compensated by filing claims. So given all that, wouldn't it be more prudent and cost-effective for the carriers if they just assessed those who are the catalyst, the cause of the losses (hence the causes of claims) in the first place - irregardless of whether or not their FICO score is above 700? Has there been any unbiased comparrison studies to show that this credit scoring is really saving carriers more money than assessments based on driving habits/history?