Some state lawmakers want to ban a common practice among insurance companies that can drive up costs for consumers.
Bills are pending in several state legislatures — including in Iowa , New York, Oklahoma and Pennsylvania — that would generally prohibit insurers from using consumers’ credit history to set their premiums for either homeowners or auto insurance policies, or both.
The so-called credit-based insurance scores used by insurers measure whether someone is likely to file a claim — the lower the score, the higher the likelihood. And, in turn, the higher the premiums they might be charged.
“This is the case even if you have a perfect driving record or your risk is relatively low,” said Michael DeLong, research and advocacy associate at the Consumer Federation of America, a nonprofit that advocates for consumer rights and supports legislative efforts to change the practice.
Other state legislatures have considered similar proposals in past years, but efforts by supporters to stop the practice have largely been unsuccessful. Currently, only a few states ban the use of credit history in certain coverage decisions: California, Hawaii and Massachusetts prohibit it for auto insurance. In California, Massachusetts and Maryland, the use of it for homeowners insurance is banned.
