NEWARK, N.J., March 23, 2011 /PRNewswire/ -- A decade-old debate has resurfaced in the Maryland State Legislature as lawmakers deliberate a bill that would bar car insurance companies from engaging in a controversial rating practice: using an applicant's credit history to help determine the price of coverage. Although Maryland auto insurers are already restricted in their use of credit information, the bill would prohibit its use in the rating process altogether.
OnlineAutoInsurance.com recommends that consumers become familiar with their state's credit-scoring laws. In some states, consumers can request a re-rating and receive a discount if their credit improves; in others, they can request that their insurer inform them how much of their premium is attributable to their credit. Regulations for each state can usually be found on the state insurance department's website.
In Maryland, credit can have such a large effect on prices that scores can actually provide or restrict some drivers' access to low cost auto insurance. According to the fiscal and policy note attached to the Maryland bill, "An insurer that rates a new policy based on the credit history of the applicant may, if actuarially justified, provide a discount of up to 40 percent or impose a surcharge of up to 40 percent."
There are two main sides to the debate over insurers' use of credit information. Supporters of the practice point out that many studies have verified the potency of credit history in predicting claims trends and that this helps insurers more accurately price policies. Opponents often recognize this but note that charging higher rates for the economically troubled can only hurt their situation.
According to the Insurance Information Institute, bills were introduced to limit insurers' use of credit-based scores in 27 states last year.
To learn more about this and other coverage issues, readers can go to http://www.onlineautoinsurance.com/low-cost/ where visitors will find informative resource pages as well as a free-to-use quote-comparison generator that can help consumers find the best prices for coverage.
SOURCE Online Auto Insurance, LLC