Florida’s Chief Financial Officer Tom Gallagher said that a new law which went into effect Jan. 1 prohibits insurance companies from using a person’s credit history against them if they are dealing with unexpected medical bills or the death of a spouse. The new law also prohibits insurers from denying coverage or raising rates based solely on a credit report or score.
“When credit history plays a role in a consumer’s ability to obtain and maintain insurance coverage, extenuating circumstances should not be used against them,” Gallagher said.
An increasing number of insurers are reportedly using credit information when deciding how much consumers should pay for insurance coverage. Of the top 10 writers of homeowners insurance, half consider credit information in underwriting. Nine of the top 10 writers of automobile insurance also consider credit information in underwriting.
The new law, passed during the 2003 regular legislative session, requires insurance companies to notify an applicant or an insured if their credit report is being requested for underwriting or rating purposes. If credit history played a role in an insurance company’s decision to deny coverage or raise an insured’s rates, insurers must inform the consumer and provide them with a copy of their credit report. If a consumer is adversely impacted by the use of a credit report, insurers will have to reevaluate the insured’s credit history every two years.
Insurance companies will also be prohibited from denying coverage or raising an insured’s rates based, in whole or in part, on any of the following factors: the absence of or insufficient credit history, past due medical bills, or place of residence.
Was this article valuable?
Here are more articles you may enjoy.