This is the best discussion I have found about credit scores and insurance. It is so good I am posting it here. You should forward this to your friends and family as another reminder of why, in some states, they need to keep an eye on their credit score.
Q: I enjoyed your piece about insurance that appeared in the Los Angeles Times. When I was in Utah over the holidays, my brother-in-law mentioned that he saved money when Allstate based his rate on his credit rating. I asked about it here in California, but my agent said that it doesn’t apply in California. Had you heard the same? Keith. Answer: The topic of using credit ratings — actually credit scores — to better assess risk is as controversial in the insurance field as it is in the mortgage sector. Although some people can’t fathom how such a correlation is possible, many insurance companies believe that an “insurance score,” which is a computer-generated numerical ranking based on a person’s credit history, is a good predictor of future insurance claims. And they have the actuarial data that shows how someone who does a poor job managing his finances is more likely to file a claim. On the other hand, says the Insurance Information Institute, people who manage their finances well tend to also responsibly manage other important aspects of their lives, such a driving a car or being careful around the house. Like a mortgage or credit score, insurance scores do not include data on race or income. They are based sole of information in your credit file. And that information, in conjunction with such other factors as the home’s construction, location and proximity to water supplies for fighting fires, is how many carriers determine their premiums. Indeed, with the advent of automation and scoring models, the process has become routine, according to III, a nonprofit, communications organization supported by the property/casualty insurance business. Each individual company uses scoring to a different extent and in different ways, but most use them to screen new applicants and to price new business. III also says that while many people don’t realize they are being scored, two-thirds of all policyholders — your brother-in-law included — have lower premiums because of good scores. So I’d check back with my Allstate agent if I were you to see if he might want to research your question before reaffirming his original answer. There you go. Great work from Marketwatch.