Virginia regulators are advising consumers to check their credit reports periodically for accuracy and ask their insurance companies about how their credit information may be affecting their policy.According to Virginia’s Bureau of Insurance, insurers look at many factors when determining whether to issue a policy and how much that policy will cost.
Whether shopping for homeowners or auto insurance, many people may not realize that their use of credit may affect how much they pay for insurance or whether they can even obtain coverage.
In Virginia and many other states, insurers may use a person’s credit information in the insurance underwriting and rating process. Some carriers may charge higher premiums or refuse to issue a new insurance policy solely on the basis of unfavorable credit information.
However, regulators point out that insurers in Virginia may not non-renew existing policies solely on the basis of the insured’s credit information.
Virginia law requires that any time an insurer takes an adverse action based on the credit information, it must tell the consumers the reason for its decision or advise consumers that they have the right to obtain the reason.
An adverse action includes not receiving the insurance company’s most favorable rate or having the insurance coverage denied or terminated as a result of the credit information. Insureds should also ask their insurance company if the credit information was used to underwrite and rate their policy and how this affected the policy.
The Bureau reminds consumers to check their credit reports periodically for accuracy and to report any errors to the credit reporting company to have them corrected. To obtain a free copy of the credit report, visit www.annualcreditreport.com or call 1-877-322-8228.
Under federal law, consumers are entitled to obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies – Equifax, Experian and TransUnion.