Credit in the
Insurance World
Credit is a basic fact of life and near-necessity in
today’s society and day-to-day commerce. You need
good credit to borrow money, buy a house or car, and
qualify for the best financing deals.
But credit also is a factor in the world of
insurance. Insurance companies use your credit
history to make decisions about coverage and
premiums. And some insurance companies sell products
that may help you make part or all of your monthly
loan payments if you are injured or disabled.
This page offers links to information about the many
ways that credit and insurance are connected, and
will help you decide if coverage is a good fit for
your situation.
Insurance credit scoring
Insurance companies may use your credit information
when determining your rates or whether to offer you
coverage. Washington, however, has one of the
strongest consumer-protection laws in the nation,
restricting how credit may be used in insurance.
Credit insurance
When you apply for a
loan or use credit to purchase a vehicle or large
appliance, your lender may ask you if you'd like to
purchase credit insurance. These are four primary
types of credit insurance:
Credit insurance is optional. Under Washington law,
lenders cannot deny your credit or loan if you
decide not to purchase credit insurance. If a lender
says you'll only get the loan if you buy credit
insurance, report it to the our Insurance Consumer
Hotline at 1-800-562-6900.
It
may be less expensive and more practical to buy life
insurance instead of credit insurance. When deciding
whether or not to purchase credit insurance from a
lender, be sure to consider your needs, your options
and how much you'll pay.
A
recent law regulating credit life and credit
accident and health insurance requires insurers to
disclose more information to consumers and to pay
out at least 60 cents for benefits and claims for
each dollar of premium they collect.
