Supreme Court Allows Discrimination Suit Over Allstate’s Use of Credit Scoring

April 28, 2004

  • April 28, 2004 at 7:24 am
    Mark says:
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    I think I’m going to file a class action because as A younger driver I have to pay more. Give me a break. The only reason minorities end up paying more is because they are notorious for having worse credit, only because when they come to this country they end up over their heads with more than they can afford-they were never taught how to manage their finances. The plaintif is hispanic, so that’s what I’m referring to. Trust me, as an Allstate agent, I know we have plenty of hispanic customers who have gotten a better rate than they would have otherwise. There are some who pay more.

    And to whoever mentioned medical bills, well those don’t count against Allstate’s score. And Allstate reconsiders extreme cases such as loss of employment. So, think of something new to complain about, now that the companies are refining the process to be accurate and a good predictor of risk.

    and, ALL businesses are in the business of profit, insurers just earn it by managing people’s risk for a fee. That’s obvious.

  • April 28, 2004 at 7:27 am
    Mark says:
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    Oh, and insurance isn’t a socialist product, it isn’t ment to be less expensive for low income people, it’s ment to be less expensive for low risk people.

  • April 28, 2004 at 7:46 am
    Mark says:
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    We’re a united country, with a Federal system of government, which means each state is a member of the union with its own law making power. Why not, then, just call states counties and take away all their law making power? that’s not how it works.

  • April 28, 2004 at 8:34 am
    Bill C says:
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    The problem with credit scoring that makes it discriminatory is that those who started out in a better over-all situation are rewarded for already being there. When you start out above the even point, its easier to stay there. When you start out in the negative, its harder to get above the even point, so you’re penalized when you attempt to employ strategies to get there.

    Many people with low credit score are trying to improve them but are penalized to the point they can’t – higher rates because in the past you didn’t pay timely is not a way to educate people to pay their insurance timely or on how to use their insurance. We tend to dwell on the argument, not on how to solve the problem.

    Because you had claims and may have abused insurance doesn’t mean you should be penalized when you’re attempting to do the very thing we’re advocating you do — become a responsible insurance consumer.

    We need to stop this mess and educate our clients. The agent or broker who swears by credit scoring is the same one who spends no time advising the client on how and when he should be using his policy, and why its important to pay his insurance (and other obligations) timely.

    He/she is also the same agent not trying to look out for the interest of the client, only their own interest and greed (profit-share, etc.). Help the client to lower his premium – rich or poor — and they’ll appreciate your service, the insurance you placed them with, have an easier time paying the premium and be more apt to pay more timely. They’ll be able to afford to buy more insurance, and self insure on minor claims because you saved money them money with lower rates, and now they have money to pay for their minor dents and scrapes. The insurance company benefits, the client benefits, and the agent benefits equally.

    Get rid of discriminatory practices, we don’t need credit scoring as a tool.

  • April 28, 2004 at 12:30 pm
    LG says:
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    Supreme Ct may get it Right –

    Insurers using Credit Score to set Rates are discrimining. There are many reasons for an individual to have a low credit score especially since there is NO STANDARD in the Credit Reporting Industry. When you go out and see what might be available to your family and allow your Credit to be reviewed – It can downgrade your score. A family can have over powering Medical Bills, so lets nail them for Auto Insurance or HomeOwneres.

    To many Insurers have forgotten they are in the RISK Business and Not in the PROFIT FIRST BUSINESS. We need the industry to get back to UNDERWRITING THE RISK and stop the Discrimination.

    LG

  • April 28, 2004 at 12:32 pm
    Sue says:
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    I have always been against using credit scoring as a tool to assign premium to a risk. I, too, feel it is discriminatory and have found many clients who are clean, have beautiful homes and good automobiles but in the past found themselves in financial trouble as many if not all of us have ourselves at one time in our lives. It is absolutely wrong to have these clients pay a higher premium or exclude them from a standard company because of their credit score. As a CSR for an independent agent, it is unfair to a client and it poses much difficulty to the agency to find a fair premium for these clients. I am glad to see this lawsuit and I look forward to other companies suffering the same fate.

  • April 28, 2004 at 12:41 pm
    MT says:
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    It is unfortunate that a social issue once agian has come to haunt the insurance industry. It is not Allstate responsiblity to make consumers to be more responsible about their credit. It is not Allstate fault more minority tend to live in urban area where physical and compreshinsive losses tend to be higher. It is not Allstate fault that on average minorities have a lower credit rating than the general population. A study has established a correlation between credit score and a propensity for certain losses. It is a fact, not a wish. This once again social policy has taken over sound business decision.

  • April 28, 2004 at 12:45 pm
    KS says:
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    All the plaintiff attorneys have to do is contact any insurance agent within a 10 mile radius. We all have horror stories where company A and B score the same client and the scores don’t match. Agents have no access to formulas, and it really does seem like the poor pay substantially more for insurance!

    I wish the plaintiffs luck and hope this is the beginning of the end of credit scoring on a national basis.

  • April 28, 2004 at 1:00 am
    Ex-Agent says:
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    Credit scoring is certainly an accurate predictor of future claims activity and has been proven meritorious in the past. When it was first enacted, I was against it, but over time I saw that it was truly an accurate predictor. To wit, the bottom 10% of my clients as determined by credit score, had 45% of the claims experienced by my 2 million dollar book of business($2 million in annual premium from 1800 customers in NY.) It also allows companies to set rates based on expected loss due to past experience with credit scores like yours. If you have great credit and no claims, you deserve a lower rate. How that is discriminitory is beyond me. If you start a small hair products business in the ghetto and grow it to a point where you can afford a $400k house outside the ghetto, should you be required to stay in the ghetto? I think not. Conversely, if you have worked hard to keep spending in check and alway pay your bills before anything else, and don’t make trivial claims because you cannot afford to fix the car yourself, you should be rewarded with lower rates.

  • April 28, 2004 at 1:03 am
    RM says:
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    What I don’t understand is why there is a problem with a perfectly good plan to have persons more likely to have accidents pay their fair share of the risk. I don’t believe that there is any doubt about the acturarial tables that find a definite link between “low” credit scores and the risk of a loss.

    As for claiming discrimination, the scoring does not provide the companies any information about race so what’s the problem.

    As for insurance companies being in the Risk business, that may be true. But the first responsibility for any company is to turn a profit. No profit, no business. We don’t need any more Kempers out there.

  • April 28, 2004 at 1:30 am
    JB says:
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    According to the insurance industry credit scoring is a nondiscriminatory, balanced, accurate predictor of future potential losses and without this valuable tool most citizens will lose current discounts and be subjected to higher rates. Without a doubt, they tell the truth. This industry, the same industry which has been found guilty of discriminatory racial redlining in the past, selling life insurance to blacks at a higher rate than whites, denying claims and failing to honor contracts in California after the earthquake, bilking consumers out of hundreds of millions of dollars through the misrepresentation of life and financial products and threatening agents should they speak out at public hearings in defense of consumers.

    The main question that needs to be addressed is a simple one. Is this policy in the best interest of the public or does it have the potential of violating the public trust?

    If answered honestly, the answer is simple. Credit scoring should not be allowed.

  • April 28, 2004 at 1:40 am
    Kelsey Wood says:
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    Credit scoring is discrimination, sure. So is rating based upon age, sex, health, driving record, age of you home, fire protection of you home, want to go on? Duh! That’s how risk is spread on a fair basis.

    Without spreading risk on a fair basis, we have social insurance, and with social insurance, we have no incentives to be lower risk clients, competition goes away, risk increases, and the system falls apart. So, right, let’s get rid of credit scoring

    Ok, now let’s get rid of age rating, motor vehicle record use, value and type of car, age of home, prior loss history, fire protection, etc and just make everyone pay the same rate.

    Let’s get rid of private insurers in a competative environment who have a financial incentive to deliver a better product at a lower cost than their neighbor.

    Let’s just set up a giant federal insurance institution to collect premiums like the IRS and distribute claim payments like Medicare. That’ll fix this nasty discrimination huh!

    Look folks, just because you don’t understand it, or have a hard time believing it, doesn’t make it wrong. Why don’t you read the independent study of 2,500,000 insured vehicles nationwide showing certain principles of credit use also have higher or lower loss history. This is fact, and is outside race, religion, creed, nationality, location, etc. It’s all how responsible you are in your use of credit. No, it’s not the only tool. No it is not a final indicator of who will have a loss and who will not, neither are other rating factors. It’s just another tool along with the other tools insurance companies have come up with over the ages to indicate degree of risk. That’s what the indistry does best.

  • April 29, 2004 at 2:03 am
    Ex-Agent says:
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    Well stated JB.

  • April 28, 2004 at 2:18 am
    Jere F. Allan says:
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    It had to happen. Credit Scoring is WRONG and does exactly what this lawsuit says it does. I have experienced too much of this in my own agency. It affects my lower income clients more than any other class. The worst effect is that the least able to pay higher premiums for homeowers and auto insurance are forced to do just that or drop their insurance altogether.

  • April 28, 2004 at 2:18 am
    CAIN says:
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    When will we learn?

  • April 28, 2004 at 2:25 am
    JB says:
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    The problem is that there have been no TRUE INDEPENDENT studies. All studies have either been industry initiated or industry funded. The studies performed by the States of Maryland, Michigan, Missourri, Washington and Alaska lend creedence to the perception that discriminatory practices may well exist.

  • April 28, 2004 at 2:37 am
    patrick freeman says:
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    credit scoring is a tool to further segregate the quality of risk.Restricting the use of this tool will flatten rates..meaning bad risks will pay less but better risks will pay more..Over regulation of business by Socialistic groups that look at Insurance companies as Utilities that simply pass out the money when people make mistakes…Insurance companies will figure out a way to avoid the poor risks..unfortunately if the use of credit scoring is disallowed then many good risks may go without insurance also…beware of Overregulation by Pedagogal politicians who dont understand risk and reward!!!!

  • April 28, 2004 at 2:41 am
    Ness Judson says:
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    Discrimination, pure and simple. Allstate’s position that said practice benefits every policyholder is absurd.

  • April 28, 2004 at 2:41 am
    pan says:
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    The use of credit scoring is nothing more than a tool for the Insurers to charge higher premiums. As I look at my standard companies today, they are all using county mutual paper for their auto programs and lloyds paper for the property.Whoever heard of having 15 pricing tiers in auto and 4 or more in property. Let’s face facts every company says the first thing you look at is the score. There was a time when in auto we looked at drivers, driving records and vehicles, property we looked at location,construction and other important underwriting information. As an Independent Agent I spend alot of time scoring clients with various companies all coming back at different levels. That is if they make it past the first score report. Companies do not underwrite any more they feed the data into their rating systems and we enter our data and pop goes the weasel.The insurance industry GIANTS are not going to police themselves. Do you remeber when the first companies started using credit? It didn’t take long for all of them to jump on the band wagon with $ signs in their eyes. THIS WAS NOT PUT IN PLACE TO GIVE INSURED’S PREMIUM BREAKS FOR GOOD CREDIT. I wish I had a list of all the potential customers that have come into my office after justing buying new vehicles or a new home, clean driving records, no claims and could not qualify for good rates. I personally hope a Federal Law is imposed against the use of credit by the insurance industry. The States haven’t been able to stand up against the pressure from the Insurance Industry Lobbyists when credit scorring is on the agenda.

  • April 28, 2004 at 3:02 am
    RAC says:
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    – I have been in the insurance industry for 35 years as an agent, risk manager and claimsman and credit scoring is inaccurate and emblematic of the property and casualty insurance industry’s efforts to take another incomplete shortcut at the expense of the public. Yes, a choosen few in the public may benefit from this flawed approach, however for the most part this is also an unjust enrichment scheme by the industry.

    – Aside from the hidden minority agenda in this incomplete effort to rate a risk, ask anyone who has been the victim of indentity theft and/or had false information impossible to remove from their credit report.

  • April 28, 2004 at 3:04 am
    Dawn says:
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    I worked once for ALLSTATE. I have perfect credit…perfect. I am 48 years old. I scored a 2! Wonder what it takes to be a one.

  • April 28, 2004 at 3:44 am
    Jay says:
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    Do people with bad credit have more losses than those who have good credit? statistically–yes… Insurance, by nature is legalized discrimination. However, just because you can show a pattern– does it make it right to use it? No. I’m sure you could show dumb people have more losses than smart people. Do we get an IQ score to determine their rate? Most Co’s treat no credit as bad credit– this harshly discriminates against minority groups who use only CASH.

  • April 28, 2004 at 4:00 am
    Retired Underwriter says:
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    I have read all the posted comments and the one that I totally agree with is the one written by “pan”. He/She hit it right on the head!!!!! I worked as an Underwriter for the Hartford Ins. Company for 23 years. They were one of the first ins. companies to use Credit scoring. It DOES discrimate against the poorer/middle class people which includes alot of minority people. It is much easier to pay your bills on time when your earning $100,000+ a year than it is when you are struggling to survive on $20,000+. Insurance Companies do NOT underwrite any more. They have the computers programmed that “screen” every application for credit scoring, past claim history, location, etc. BEFORE it is even sent to an Underwriter to “review”. Underwriters are not allowed to use “judgment” anymore in their decisions on whether or not a risk is acceptable – that is why I retired from the Corporate rat race. Credit scoring should be abolished – the only one who is benefiting from Credit Scoring is the profit being made by the Insurance Companies! BUT – these ins. companies are NOT lowering their rates, nor are they paying claims any better!!

  • April 28, 2004 at 4:07 am
    Clinton says:
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    The State of Texas initiated a study last year to try and determine the fairness/effectiveness of insurance scoreing. The study concluded that the correlation between loss cost and insurance score was so significant (.95 with the highest possible being 1.0), that it was an INDEPENDENT predictor of risk and provided insurance companies an effective and fair means of discriminating(read segmenting)between various risks. Many customers get great discounts, and rightyfully so, because their propensity to file a claim is lower.

  • April 28, 2004 at 4:36 am
    Public Issues says:
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    Veiled Insurer-To-Consumer Claim Theft-Robbery Warning Signs.

    How Insurers Can Keep Money Owed To Homeowners.

    -If â€Ŕlosses” could talk…

    1. Do the Insurers-Adjusters use discernibly measurable â€Ŕget in, cut a check, and get out” claim estimating and settlement schemes that set-up homeowners for a time consuming-bogged-down challenge of the Insurers-Adjusters understated damaged property assessment and estimate values?

    Does their construction business / claim settlement estimating software thoroughly define actual and itemized construction products, processes and pricing references so as to be able to reasonably anticipate thoroughly â€Ŕfixing” a given â€Ŕloss” scenario…in any given region of the country? Do Insurers-Adjusters estimates unreasonably â€Ŕignore” that construction business data?

    2. Is it reasonably clear and evident [hail, wind, fire, moisture, flood, etc.] property damage is consistently â€Ŕmissed” by Insurer-Adjusters’ estimates? Claim under-assessment / underpayment will follow. When ALL damage is (eventually) verified by another adjuster, are verifiably unsafe-lowball-substandard repair or replacement processes and pricing still offered by the Insurer-Adjuster in the name of â€Ŕnegotiating the claim”?

    3. Is so called local â€Ŕcompetitive estimating practice” being â€Ŕinvented” by Insurer to confuse and discourage consumer from using [competent-high quality] skilled-competitively priced, contractors? Do the Insurer-Agent / Broker-Adjuster subtly â€Ŕsuggest” that you, the homeowner, find another Contractor if the [market competitive] Contractor estimate is not to their liking?

    4. The Adjusters property damage-repair assessment / estimate â€Ŕtestifies” as to whether a specific single trade craft or multiple trade crafts are warranted for â€Ŕloss” repair or replacement. Does the adjusters estimate to the consumer then contradictorily deny that multiple trade â€Ŕloss” repairs require G.C. oversight and costs?

    5. Your policy allows for appropriate â€Ŕcontractor[s]-of-choice”. Does the Insurer-Agent-Adjuster try to [force-coerce] you, the homeowner, to act as your own â€Ŕcontractor” by using unfair and deceptive claim assessment-estimate value theory â€Ŕtestimony” via ignored / contradictory policy language entitlement interpretations in their estimate?

    6. Does the Insurer-Adjuster invent reason[s] why it is fair and reasonable for you to trust and manage roofing, carpet, etc. tradesmen, verses having a / your (trusted and experienced) Contractor doing the same as part of the whole [G.C.] supported project scope?

    7. Does the Insurer-Adjuster try to â€Ŕchoose” the contractor the homeowner is â€Ŕentitled to” by unfairly / illegally ignoring the contractual relationship of the contractor and the homeowner, and sending their own â€Ŕpreferred” contractors to attempt to lure the insured to break the existing contractor-client relationship?

    8. Are commonly known materials and labor and overhead costs irrationally and unfairly â€Ŕbundled” and not line itemed for verifying ALL contractors’ financial investment accountability-purchase, installation and profit costs? Are consumer proven, construction repair-replacement deficiencies (in the adjusters’ / contractors’ assessment-estimates), ignored by the Insurer-Agent-Adjuster?

    9. Is â€ŔLoss” defined-anticipated [prima fascia / quantum meruit] Contractor / G.C. labor and 10% / 10% overhead and profit (OHP) values excluded-robbed from the Insurer-Adjuster-to-Consumer estimate? Are G.C. quantified* â€Ŕloss” damage scope and repair processes (that inherently define intrinsic claim estimate structure-settlement procedures and protocol norms) faked by the Adjuster and supported by the Insurer-Agent?

    Does mathematically fair and reasonable Contractor-G.C. (Primary-General Contractor labor and Contractor overhead and profit margin data (10/10) â€Ŕappear / disappear” on the Insurer / Adjuster-Consumer delivered estimate? Is Contractor- G.C. 10% overhead and profit truly and actually accounted for? Do the math for yourself.

    (E.g. $8,000.00 + 10% ($800.00) overhead = $8,800.00 = (Whole Contractor Repair-Reconstruction Investment) + 10% Profit ($880.00) = $9,680.00 total estimate value.

    Notice the 10% profit value is truly 10% of the whole investment? Be careful of this particular value sum total being underpaid by the Insurer-Adjuster. (See paragraph 12)

    10. Are actual G.C., Builder, etc. Contractor [material, labor, taxes, overhead, (general conditions, equipment, bonds, phone bills, permits, etc.) and profit] factors and values of the claim, that are reasonably and readily known to be needed by the Adjusters’ â€ŔContractor estimate model”, intentionally and contradictorily denied (not voluntarily accounted for and forwarded), in the Adjuster-to-Consumer estimate, even before a Contractor is hired?

    11. â€ŔImplied-in-fact” contract theory. When the â€ŔLoss” implies that policy claim protocol values equivocal to specialty or G.C., Builder, Remodeling business processes and values exist…does the Insurer-Adjuster [knowingly] provide a fake / deceptive rendering of those business process values to unsuspecting consumers via an under assessed-underpaid claim estimate / settlement â€Ŕoffer”?

    12. Does the Insurer-Adjuster submit arbitrary claim settlement estimating practice totals that do not reflect â€Ŕreasonable-to-conclude” construction business estimating norms? (E.g. G.C. Roofing, carpet, etc. sub-trade investment is removed from a G.C. valued estimate and then G.C. overhead and profit margins are totaled).

    13. Has the Insurer-Agent-Adjuster implied or stated irrational-nonsensical rhetoric designed to trick and confuse consumers? Are simple addition / subtraction construction business processes and estimating value math facts avoided, twisted or lied about? (E.g. ‘Roofing contractor 10% / 10% overhead and profit margins is included in the value of your estimate, soooo, the Primary General Contractor overhead and profit investment values are supposed to be less than 10% / 10%’). This is very, very popular Insurer-to-Adjuster-to-Consumer trickery that underpays claims / claim values.

    14. Do Insurers claim-imply to consumers that G.C. quantified â€Ŕloss” dollars are not commensurably (â€Ŕprima fascia”-â€Ŕquantum meruit”) due / owed a hired or [â€Ŕloss” defined-anticipated] G.C. business model?

    15. Do Insurers-Agents-Adjusters imply to consumers that their claim estimate alone is the first / final word (equivocal remuneration fix and fulfillment) in settling the construction products, reconstruction-restoration processes and pricing of the â€Ŕloss”?

    16. The implied intent of an Insurer-Adjuster assessed â€Ŕloss” estimate is to â€Ŕput someone back to where they were before the â€Ŕincident” created the â€Ŕloss””…and ALL that that can mean. Is the â€Ŕtestimony” of the Insurer-Adjuster-Consumer paperwork, delivered to the homeowner, true or untrue in the specific and overall nature of its discovery, disclosure? Does the Insurer-Adjuster assessment-estimate prove truly good faith damage scope verification and generally appropriate repair processes and cost values have been (Insurer-Adjuster) attempted / fulfilled?

    17. Does the Insurer-Agent-Adjuster try to force â€Ŕlost profits and business opportunity” type scenarios into a community / marketplace? Does (â€ŔRed Lining”) uncompetitive and predatory claim settlement â€Ŕnegotiations” rule certain societal regions and demographics? Are older, busy, younger, inexperienced, minimally educated, poor, etc. (Insurer indemnified consumer’s) special targets for under-assessed / underpaid claims?

    18. Adjusters can be messengers-accomplices to Insurer / Carrier â€Ŕinstructions” for unfair claim settlement practices. Beware of such potential in daily (single) or CAT (high volume catastrophe) claim settlement scenarios.

    19. Are â€Ŕnegotiations / consultations” between your â€ŔContractor-of-Choice” and your insurance adjuster â€Ŕsabotaged” by the Insurer-Agent-Adjuster? By using a limited-narrow â€Ŕinterpretation” of pubic adjusting business definitions and duties, and [similar] construction business definitions and duties, an Insurer can now claim a Contractor is â€Ŕillegally” acting as Public Adjuster (PA). This helps the Insurer-Agent-Adjuster to â€Ŕnegotiate” directly with a [construction business naïve] homeowner only.

    Consequently, a Contractor>Client>Adjuster>Client>Contractor>Client>Adjuster>Client >Contractor…communication circle-(circus) is [irrationally] Insurer implemented, replacing concise Contractor-Adjuster damage assessment / estimate problem solving processes. Working, naïve, busy, disabled, elderly, etc. consumers are put under unnecessary duress from Insurer-Agent-Adjuster.

    20. Is the â€Ŕappraisal” process a [prematurely] used â€Ŕnegotiation” tool of choice for insurers against their clients? Inherent claim settlement delays are set into motion with such, in effect, â€Ŕclaim severity (payout) control” strategy.

    21. Does the Insurer-Adjuster live up to their obligation to properly verify-assess all Contractor-Consumer suspected / discovered property damaged…and thorough reconstruction processes? Is damaged property, and reconstruction processes, arbitrarily dismissed and unfairly subordinate to Insurer-Adjuster estimate â€Ŕtotals” only?

    Does the Insurer-Adjuster emphasize their estimates dollar â€ŔTOTAL” and NOT how and why their estimate total was reached?

    *Certain insurers claim that â€Ŕloss” repairs require 2 or more specialty trade crafts [i.e.; Roofing, Painting] involvement before a general construction business is â€Ŕwarranted”, â€Ŕappropriate”, â€Ŕindicated”. The truly competitive marketplace allows / states otherwise.

  • April 28, 2004 at 5:33 am
    JM says:
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    I did believe in credit scoring in the past. Then I lost my job and spent 2+ years damaging my credit with slow pays, etc. I could have walked away from my debts with chapter 7 however, I believe that I must pay my debts and not use the courts to avoid them. In the meantime my rates have gone up due to deteriorating credit score. I am the same good driver & homeowner as before but must pay dearly for the higher credit score. My perspective has changed.

  • April 28, 2004 at 5:35 am
    HT says:
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    From a statistical and actuarial standpoint, there is no doubt that credit scoring is a valid indicator of likelihood of loss.

    However, that does not necessarily mean it is the socially correct thing to do.

    For life insurance, there is no doubt whatsoever that the mortality rate of African-Americans is higher than that of caucasians. However, life insurance companies do not charge higher rates to African-Americans because it is simply the wrong thing to do.

    My point is that just because some rating criteria has a definite correlation does not necessarily mean it should be used.

  • April 28, 2004 at 5:55 am
    DJ says:
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    I think credit scoring as just a ploy for the large insurance industry to take advantage of the hard working people of this so called united states. If we were united then all states would have the same policies for these types of mandated needs all must have in order to own a vehicle or home. I think the big pocket books have lined the politians wallets to pass these laws to benefit yet again the privilaged at the underprivilaged and hard working back bone of this country. We should be only charged higher premiums if we are a greater risk due to poor driving records or excessive losses on our home owners policies, not due to credit history. If everyone in this country got paid a fair wage everyone would have good credit. The ones we should credit rate are the corporates telling us how to live and be regulated. Let’s all hope the court does get this right and this will become a chain reaction flowing down to all other insurance companies and ALL States.

  • April 29, 2004 at 7:56 am
    Lew says:
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    Statistically, credit is an effective predictor for a poor risk. That being said, all of you seem to act as though this is the only tool an insurer uses. I believe MVRs and CLUE reports are a good indicator as well. Credit rating should still be used in combination with other information.

  • April 29, 2004 at 8:04 am
    Robert says:
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    Poor credit scores are NOT a good predicter of more claims! The theory fails to take into account morals and ethics.

  • April 29, 2004 at 9:03 am
    Kurt says:
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    By definition, underwriting is a means of discriminating between preferred and non-preferred risks. Every company and every policy discriminates in some way. As for credit scoring, it has proven to be a valid predictor of losses. The real question is whether credit scoring is bad discrimination – illegal racial discrimination. The plaintiff’s say it is because they believe that more minorities are negatively affected by it. The plaintiff’s must presume that more minorities have bad credit. Allstate says it isn’t racial discrimination because the system does not consider, or even know the race of the applicant. As an American, I don’t believe disparate impact should be able to prove illegal discrimination. As an agent, I’d be happy to do away with all credit scoring headaches.

  • April 29, 2004 at 11:45 am
    Steve R says:
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    I have argued this issue for years with the former Allstate agent pushing this lawsuit. Ever since we started using credit there has been a niticeable decrease in our loss ratio. Unless we are a government agency we are in business to make a profit. I live in a town which is nearly 50% Hispanic. If their credit is so bad,just because of their race,why do I have so many Hispanic clients in our preferred companies? Credit scoring is not perfect but it is an improvement over antiquated underwriting systems

  • April 29, 2004 at 2:35 am
    BB says:
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    If credit scoring were fair, it would be accurate as well. Unfortunately, it has proven to be neither. In the state of Texas where I operate some agencies, we have spent more time and money on this issue than any single thing since 1998.
    How can it not be accurate, you ask? Simple. I have clients who are gainfully employed business owners with much more money in the bank than most and they have “No Score”. I have clients whose 18 year old son or daughter who has NEVER EARNED AN INCOME OR PAID A BILL who has much better credit score than THEY do. I have clients who qualify for the best tiers in one company and are bounced out of another.
    The criminal thing is that independent agencies like mine have been dealing with front office credit scoring since 1998 and have been doing our best to explain that to a client…which is next to impossible. The major 4 insurers in our state, who have claimed in the past that they do not use this system, have been using it for 25 years…..who do you think came up with the acturial data to say it works. If it works for their bottom line, great. But I am curious as to how one can explain it to be fair…since it is not accurate.

  • April 29, 2004 at 6:21 am
    MARY ANN REILLY says:
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    AS A LICENSED INSURANCE AGENT, I THINK
    THE INSURANCE COMPANIES HAVE SOME NERVE USING CREDIT SCORES TO EVALUATE
    UNDERWRITING RISK. CLAIMS RECORDS
    ARE ENOUGH. WE ARE BECOMING A BUNCH OF CREDIT NAZIS IN THIS COUNTRY. AND BELIEVE ME, EVEN IF A PERSON DOES NOT MAKE A CLAIM OR PAYS BILLS ON TIME,
    CREDIT REPORTS CAN BE ATTACHED BY
    UNSAVORY BUSINESSES. LET’S END THAT
    FIRST.

  • May 4, 2004 at 2:10 am
    marshall j. mcwilliams says:
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    i have never been a fan of credit scoring to obtain insurance coverage. it is not like purchasing a house. why should your credit score be relevent in obtaining insurance? strike one up for the consumer. shame on you Allstate, don’t be greedy.

  • May 4, 2004 at 3:10 am
    Kevin says:
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    Credit scoring can be a valuable tool in determining risk. However, the 3 companies that provide credit scores can’t even agree on an individuals score. If the system is flawed to this degree there can be no doubt that the system is unfair. Credit should not be used to determine insurance rates until the unregulated business of scoring credit can be made reliable.

  • May 4, 2004 at 6:57 am
    JP says:
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    Lets see your auto rate changes based on your age, discrimination? Your auto rate changes based on your Zip code, discrimination? Your auto rate is based on your driving record, discrimination? Your homeowners rate is different for frame vs masonry discrimination? Its very hard to get homeowners coverage if you don’t keep your home in good shape, discrimination? ITS ALL DISCRIMINATION, to have you pay YOUR rate rather than the rate of a 16 year old driver who dosn’t have a clue who lives in an area with high losses, and has a horible driving record. Credit Scoring is to try to better price your policy based on you. The vast majority of clients would see a rate increase if it went away because you would once again help pay for those who are causing most of the claims. This from an agent who would love to see it go away because it would make our lives much easer, trust me it is a real pain for us to administer!

  • May 14, 2004 at 1:05 am
    David says:
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    Credit Reporting itself in inherently racist. Credit reporting agencies (CRAs)sell consumer’s personal financial information to banks, credit card issuers, insurance companie, etc. They do so by catagorizing. Most poor and lower middle class (disproportionately minorities) fall into what is known as “subprime.” Meaning that they have had some sort of financial difficulties or have little in the way of financial histories. This leads to massive credit card offers by subrime lenders such as Providian (although ordered out of the subprime market by the comptroller) or Capital One, which charge upwards of 30% interest to those consumers. Needless to say, eventually many find they can’t keep up with the payments and default. Now guess what? This puts them right back into a subprime pool that they can never swim out of. Enter the insurance industry. About 20 years ago the Inurance Industry lobbied hard in every state to get mandatory insurance laws…and they won. Now every consumer who needs to drive to work to support a family needs to have insurance or they could be fined/arrested.Our states have forced us to deal with them or, in most cases, not work. The people who need to do the most driving are not the wealthy or upper upper middle class. They are the Subprime group. The working stiffs who are most liable to get into financial trouble because of a job loss, turn in the economy, tragedy, etc. What the insurance industry won’t tell people is that African American drivers file a disproportionate ammount of claims compared to white drivers. This is not due to driving skills but more likely to the areas which minorities must live as opposed to wealthy whites. Insurers would rather not insure many African Americans (or other minorities for that matter) but cannot refuse on the basis of race because, of course, it is against the law. So they use credit reports instead, knowing that the highest percentage of African Americans have blemished credit files. This way, as they see it, they can discriminate and stay with in the law. African Americans pose higher insurance risks because, as lower income americans, they do not own vehicles with advanced safety equipment…thus they file more personal injury claims. They live in poorer neighborhoods…thus they are more prone to theft and vandalism. And, as mentioned, they must drive more to support themselves and their families than their wealthy counterparts. There has never been a study that conclusively linked poor credit and bad driving (not even by the Isurance industry). Theres no way you could based on what I’ve just said. The poor are the most credit challenged and do the most driving and live in the worst neighborhoods. Funny thing is, the Fair Issac company, the ones who supply the data for insurance scoring…don’t even take driving records into consideration. I hope the case against Allstate opens some eyes to this blatant ripoff of consumers by the lowly insurance industry. Oh by the way, you know why the insurance companies have lost so much money in the past? Not because of claims but because they gambled on the stock market and lost. Now they’d like to pass the savings on to you.

  • August 15, 2004 at 12:29 pm
    T & P says:
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    It isn’t fair to someone who has had the same Insurance Co. for over 30 yrs. One time in 28 yrs. we have problems paying our bills, file bankruptcy and can’t find a job. The put you in a category, no matter how many years you struggled to pay all your bills on time and do exactly what you were supposed to do and contact creditors who gave you a hard time. I really feel everything you should be taken in account and not just one VERY BAD part of your life. We now are back on our feet and got there all by ourselves, {new older house and car} but after all these yrs. of having ALLSTATE when we moved to another state they ran a credit check and raised our rates and this new homeowners policy was ridiculous. We went somewhere else. {excellent driving record} Good Luck to them and their DISCRIMINATION POLICY.

  • August 15, 2004 at 12:29 pm
    T & P says:
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    It isn’t fair to someone who has had the same Insurance Co. for over 30 yrs. One time in 28 yrs. we have problems paying our bills, file bankruptcy and can’t find a job. The put you in a category, no matter how many years you struggled to pay all your bills on time and do exactly what you were supposed to do and contact creditors who gave you a hard time. I really feel everything you should be taken in account and not just one VERY BAD part of your life. We now are back on our feet and got there all by ourselves, {new, older house and car} but after all these yrs. of having ALLSTATE when we moved to another state they ran a credit check and raised our rates and this new homeowners policy was ridiculous. We went somewhere else. {excellent driving record} Good Luck to them and their DISCRIMINATION POLICY.

  • August 15, 2004 at 12:29 pm
    T & P says:
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    It isn’t fair to someone who has had the same Insurance Co. for over 30 yrs. One time in 28 yrs. we have problems paying our bills, file bankruptcy and can’t find a job. The put you in a category, no matter how many years you struggled to pay all your bills on time and do exactly what you were supposed to do and contact creditors who gave you a hard time. I really feel everything you should be taken in account and not just one VERY BAD part of your life. We now are back on our feet and got there all by ourselves, {new, older house and car} but after all these yrs. of having ALLSTATE when we moved to another state they ran a credit check and raised our rates and this new homeowners policy was ridiculous. We went somewhere else. {excellent driving record} Good Luck to them and their DISCRIMINATION POLICY.

  • April 1, 2005 at 7:06 am
    Stephanie says:
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    My friend and I both recently recieved forms to fill out supposedly to take part in the class action lawsuit against Allstate…. has anyone else recieved this? I am scared to fill it out incase its bogus.

  • April 2, 2005 at 4:05 am
    cynthia dowell says:
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    my aunt receive this same class action suit, but it asked for her ssn#, did it asked for anyone elses.

  • April 2, 2005 at 5:03 am
    stephanie says:
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    yes it asked for our SSN, thats why it concerns me

  • April 4, 2005 at 9:35 am
    Lilly says:
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    I received a letter from The Garden City Group Inc. Titled Allstate Fair Credit Reporting Act Litigation Statement.

    I initially thought it’s a fake. It asks for your Social Security Number. The deadline to file is July 13, 2005. I have seen other class action lawsuits. Never have they asked me for my SSN.

    Is this the same letter others received?

  • April 4, 2005 at 10:41 am
    Pattie says:
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    I received a letter with a form to fill out as well. I misplaced it, possibly threw it out with the trash. Any ideas on how I can get a copy?

  • April 4, 2005 at 5:31 am
    Marinel says:
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    I also recieved the letter. I to am worried it may be a fake.

  • April 8, 2005 at 11:30 am
    Irene says:
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    According to my Allstate agent (very nice man) this lawsuit is legit. He couldn’t comment on it but said there is a number in the paperwork for anyone who has questions.

  • April 14, 2005 at 10:16 am
    CI says:
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    How do I go about getting the paper work to sign? I can’t find the letter Allstate mailed out and after checking out the articles and researching this lawsuit, I believe they were wrong in how they scored clients. Any help would be appreciated…Thanks CI

  • April 14, 2005 at 2:10 am
    Diane says:
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    I got the letter too. I’m still wary of their asking for my SSN on the form.This apparently is just to get a copy of your credit report. The website they gave is http://www.creditreportsettlement.com. I haven’t looked at it yet, though.

  • April 20, 2005 at 3:50 am
    Emiril Zimmer says:
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    I did…and lost it…which is why I’m on here trying to find out some info. I know for a fact that we are paying more for our homeowners thru Allstate because of a bad credit score at the time we signed up.

  • May 2, 2005 at 6:04 am
    becky says:
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    I recieved this letter also, I sent in the form but now I cant find the letter. I am paying too much for my homeowners ins with Allstate, and they changed my 500.00 deduc for hail damage to 2000.00. I’m trying to figure out how they can do this. I’ve called several other companies they quote me about 200.00 less a year and the hail deduc is the same as the 500.00 deduc.

  • May 4, 2005 at 7:06 am
    Arnie says:
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    I was involved in a class action lawsuit for special rate employees working for the U.S. Government. A SSN was required on the claim form.

  • July 4, 2005 at 12:35 pm
    Michael says:
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    I was insured by allstate but could not afford it anymore. I ended up getting a ticket and lost my license because of it. I think it is wrong to score peoples credit to determine there ratings. Because of what they did I am still having a hard time getting my life back on track.

  • July 22, 2005 at 12:27 pm
    Leslie says:
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    I just talked with the customer service. They said they settled out of court on July 18. Anyone that is intitled settlement should receive it in 6 to 9 months.

  • July 26, 2005 at 3:12 am
    JERALD WALKER says:
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    WRONG IS WRONG SOMEONE WILL BE MAD IN THE END.

  • August 21, 2005 at 4:14 am
    Lauren says:
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    Hello to anyone.
    I have a home insuraned in Galveston county for about 30 years, it is a rental
    every year the insurance increases about
    10%, actually there are 3 policies that
    ins co say has to be had.
    dwelling, flood, and wind.
    I finally asked about TOTAL REPLACEMENT COST($150,000) WHEN MARKET VALUE IS ONLY
    $95,000, THE INSURANCE COMPANY SAID THEY
    WOULD ONLY INSURE for total replacement cost.
    IS THIS LEGAL? I CAN BREAK EVEN ON RENTAL
    INCOME, VS, TAXES AND INSURANCE AND NOTE.
    PLEASE ANYONE REPLY
    LAUREN GREENWOOD

  • August 31, 2005 at 9:17 am
    William Washington says:
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    Is there any way that I can find out if I am intitled to any money? My wife and I did recieve a notice on this matter, but our copy was lost when our last hard drive went bad.

  • September 27, 2005 at 7:39 am
    Julie says:
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    I was just wondering when we can expect what ever we are getting as far as a settlement goes. I filled out all the necessary paperwork and mailed it back in before it was due. I no longer have allstate they are just too expensive, and I know that after paying crazy premiums for the last 8 years, I should have something owed to me. At least I would like to think so. What Allstate should have considered was who paid their premiums and never made a claim. My credit score is not good because of a previous marriage that had been over for at least 7 years before I even took out Allstate insurance. Any money would be nice. Julie

  • October 1, 2005 at 4:48 am
    LP says:
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    Does anyone have any specfics on when award letters will be mailed out? The website’s info has changed since they went to court in July.

  • October 20, 2005 at 8:59 am
    Carolyn says:
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    Has anyone heard when we can expect payment and how much it will be?

  • November 7, 2005 at 1:10 am
    Tiffany says:
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    I was wondering the same thing, and that is if anyone received any information on when we will recieve payment any little bit would be better than nothing. Allstate needs to be ashame!

  • November 16, 2005 at 10:41 am
    Bobbi says:
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    Any news yet on when payment can be expected? I can\’t believe that it would take 6 to 9 months as stated below, I think that there would be some type of time limit on how long they have until payments go out.

  • January 17, 2006 at 2:06 am
    sam colvin says:
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    Has this gone back to the Texas court yet and what was the results.

  • January 17, 2006 at 2:34 am
    Julie Bucko says:
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    It is my understanding that we are supposed to recieve what ever payment we are going to get sometime this month. But as of yet I have not heard or seen anything. If anyone gets a check or hears anything please let us know.

  • January 17, 2006 at 3:00 am
    LINDA says:
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    Julie,
    Who did you get that information from. I\’m just curious.I haven\’t heard anything about payment.When you call the numbers given for info they are very vague when answering questions about the case.

  • January 20, 2006 at 9:33 am
    Michael Barbeau says:
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    I got something in the mail about this lawsuit and for me to fill out a form and send it in. If I mailed it off before the deadline then I would become part of the suit. I have not heard anything sience it hapened. How can I find out if I am going to get anything.

  • January 20, 2006 at 10:01 am
    Bobbi says:
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    I called the number given on the website for information, there is no live person to talk to and it says that there has been an appeal filed and there will not be any dispursements until the appeal is settled. Who knows if we will ever get anything out of this.

  • February 19, 2006 at 11:45 am
    susan says:
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    apparently this lawsuit is for FLA and TX only, if you got the letters and read the info you would know that it won\’t be til way after july 2006 before you hear anything…allstate gets to prove whether or not YOU (INDIVIDUALLY) were discriminated against!!!Last date to confirm is JULY 2006!!! Paperwork says you may get between 59 and 79 $$$ up to $115.00 or so…(don\’t quote me on the last figure) so as w/ all class actions, wait…you\’ll get your pittance and the lawyers will get the majority!!!

  • August 12, 2006 at 7:41 am
    Leon R says:
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    Allstate is not the only insurance company practicing discrimination of those with poor credit ratings. When I moved to the Mid West, several companies turned me down and one would only insure me if I took and completed a Consumers Credit Course. My monthly premium was $98 for a used, NO Loan vehicle and a clean driving record while a relative with the same company and same year vehicle paid only $29 a month. I know it might be a little late, but who would I complain to about this since I have moved out of state 3 years ago. Have a feeling that Geico, my insurance carrier is doing the same. I do know that Wal-Mart will not hire anyone with a poor credit rating even though they deny it. Have applied several times for jobs there when they were in desperate need for workers and have never been called for an interview while others I know with good credit who had applied at the same time have been hired.

  • September 22, 2006 at 8:42 am
    Keith says:
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    Question. Is the lawsuit just for the state of Tex and Fla? And if anyone has any contact info to apply. Please let me know ASAp.

  • November 10, 2006 at 8:31 am
    Julia Garcia says:
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    I\’ve been with Allstate since 1996. Policies included auto, renters & personal property.

    June 2003 requested homeowners insurance on new home. My agent came back and said I was denied due to my credit. I just bought a home with no problem, less than 5 1/2 interest.

    He advised me to go to another insurance company and they would insure me.

    I bought a second piece of property and still could not get a homeowners from Allstate.

    I then called regarding additional coverage on an existing policy. I was advised that Allstate would insure my properties.

    I did not hear about the lawsuit against Allstate until October 2006. Please advise as to any action I need to take in the near future.

  • June 1, 2010 at 4:27 am
    Nancy says:
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    I just got a quote from American Family Insurance for Auto Insurance. The Amount was outrageous. The Agent told me that it is common to do a Credit Check, in fact he told me that most Insurance Co follow that procedure. I have a 6 year old SUV, no tickets or accidents on my driving record for the past 5 years. For a 12 month Policy was gonna cost me $1500. Basing a Rate on someones Credit Rating is Discrimination. It needs to Stop.



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