Insurance companies may use your credit information to decide whether to sell you insurance and what rate to charge you. A company can't refuse to sell you a policy or cancel or not renew your policy based solely on your credit, however. The way companies use credit information varies by company.
- Companies that use insurance credit scoring: Personal Auto | Homeowners
- Companies that don't use insurance credit scoring
What Is An Insurance Credit Score?
An insurance credit score comes from your credit history. Companies use the scores – along with other factors – to estimate your potential to have an insurance claim.
Companies look at the following items in your credit score:
- the number of loan and credit accounts you have,
- the amount you owe,
- your history of past due payments,
- the age of your oldest and newest accounts, and
- the number of checks or inquiries of your credit history in recent months or years.
Note: “Accounts" includes mortgages, loans, credit card accounts, and retail charge accounts.
Texas law allows insurance companies to use insurance credit scores, but mandates that the Texas insurance commissioner regulate their use. Texas rules regarding the use of insurance credit scores are among the strongest in the country.
Companies that use credit information must give you a disclosure form that describes your rights and protections.
Your rights and protections include:
- Credit information can't be the only factor a company uses when deciding to sell you insurance and at what rate.
- Companies that use credit scores must file their insurance credit scoring models with TDI. To request a copy of a company's insurance credit scoring model, send an open records request to the Texas Department of Insurance.
- The company must tell you how to dispute inaccurate or prohibited credit information.
Credit Scoring Exceptions
Insurance companies can’t refuse to insure you or charge you more if your credit score was hurt by a divorce, temporary loss of employment, or similar life event. Companies must also make exceptions if your credit score was hurt because you were the victim of identity theft or if you experienced the death of a spouse, child, or parent. Insurance companies may require you to document the event before providing an exception.
To ask for an exception, send a written request to the insurance company.
After the insurance company gets your request and documentation, it may consider only credit information not affected by the event, or it must assign a neutral credit score.
Companies aren’t required to consider repeated events. You may file a complaint with TDI if you think an insurance company didn’t make appropriate reasonable exceptions. Visit our Insurance Complaint Process web page to file a complaint.
- How to dispute credit report errors (Federal Trade Commission)
- Consumer Bill of Rights for Credit Life, Credit Disability, and Involuntary Unemployment Insurance (English | Spanish)
- Rules and statutes governing insurance companies' use of credit scoring: Insurance Code Chapter 559 and 28 TAC Chapter 5, Subchapter U