A new study from the Consumer Federation of America finds that safe drivers with bad credit pay an average of 905 dollars more than drivers with excellent credit scores. Director of Real Reform Louisiana Ben Riggs says non-driving related factors should not determine auto rates…
“Here in Louisiana we’re seeing drivers who are safe drivers with poor credit paying 111 percent more than drivers with excellent credit.”
According to CFA, State Farm charges people in Louisiana with fair credit a 78 percent surcharge over the premiums charged to excellent credit drivers and a 224 percent surcharge for people with poor credit. But Insurance Commissioner Jim Donelon believes credit is an accurate predictor of the likelihood of loss for a policyholder.
“Studies have confirmed that folks with poor credit do indeed cost insurance companies that provide them with credit more than folks with good credit.”
Riggs says it’s time Louisiana stops allowing auto insurance companies to penalize good drivers, just because their credit score is not good. He says this practice allows insurance providers to pad their profits…
“If you have a good driving record with poor credit, you will pay more for auto insurance than a driver with a DWI with excellent credit. It’s rewarding dangerous drivers and penalizing good drivers.”
Riggs says three states have passed laws to prohibit using credit scores in setting insurance prices, California, Hawaii, and Massachusetts. He points out all three states have cheaper auto insurance than Louisiana. But Donelon says insurance companies have seen people with poor credit try to use minor accidents to improve their financial situation…
“You are more likely to cost an insurer money by pursuing a frivolous claim for example than you should pay more.”
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