Car insurance companies that don't penalize for no credit cards?

[EKW]

I think I've posted about this once before, but really need to ask again. I use Farmers. I've been with the company for 32 years. I haven't had a claim for well over 20 years...and that was for hail damage, not an accident.

Despite all that, they consider me to be high risk because I don't use credit cards. Doesn't matter to them that I've purchased and paid off 3 cars over the years.

I'm tired of being penalized for being fiscally responsible. To those who want to flame me for this: please feel free to not respond!

If you don't use credit cards and have an insurance company that doesn't penalize you for this, could you please share?

Thanks!
Beth

 

[SandrA9810]

I don't believe I was penalized at all when I signed up with AAA for insurance. They just pulled my driving record and gave me a quote off of that. Which BTW, until you visit with an agent and have them pull it, the computers will only give you a guestimate based off of other drivers in your area, age, and driving record. So a true quote would be in an office, not over the internet. My internet quote was nearly twice as much as what I got in the office.

How do you know you are being penalized? I would assume as a long time member, you'd have a greater discount for that. Are your rates comparable to other companies? Would it be in your favor to change? And do you think they'd work in a magic discount if you said you wanted to cancel? I'd assume that they only pull a soft credit report every few years. But I've never seen any one's insurance go up in price without outside factors, like moving, getting into an accident, or getting an new car.

 

[mkandjpsmom]

I used to have state farm for my home owners insurance and auto and the credit card thing has never come up. My husband and I don't really use credit cards. We don't have a major CC. Were Dave Ramsey people. The only card I have is Kohls. When I would would get my renewal all that was listed to affect our rate was safe driver discount and multi line discount. When my husband had an accident that was listed against us. We now have USAA which is only available to us because my FIL is retired military/goverment. Our rate for auto ins was cheaper so I dought we are being penalized for not having Credit cards.
HTH

 

[kfeuer]

When you say they're penalizing you because you "don't use credit cards" are you referring to your credit score? I work for an independent agency and none of our companies care about credit card usage, but they do use credit scores as an underwriting tool. You have to have a high credit score to get the best rates.

It didn't use to be that way, but the insurance industry has changed and I don't see them going back to ignoring credit. Statistically speaking, people with bad credit are more likely to file claims. Unfortunately people with no credit get lumped in there.

If I were you, I'd work on improving my credit score. Open a card and use it at least once monthly and pay it off. It's not just insurance companies that look at credit, a lot of employers check your credit before they'll hire you. In this day and age it's important to have good credit.

 

[Jeff_G]

If I were you, I'd work on improving my credit score. Open a card and use it at least once monthly and pay it off. It's not just insurance companies that look at credit, a lot of employers check your credit before they'll hire you. In this day and age it's important to have good credit.

I have a better idea we should all get together and file a class action law suit against the insurance companies for this practice.

Bad credit I understand, no credit (ie no debt) I dont agree with.

 

[CdnCarrie]

I don't get the connection between insurance and credit cards? Maybe it's an American thing. My insurance company knows nothing about my personal finances. They just based my policy on my claim history and the age/size/value of my home.

 

[Swimalie]

I have a better idea we should all get together and file a class action law suit against the insurance companies for this practice.

Bad credit I understand, no credit (ie no debt) I dont agree with.

Having a credit card doesn't mean you have debt. I have 2 major credit cards and the only debt I have is my mortgage. I pay my cards off each month and don't consider that debt.

We have USAA and they have never asked us for credit card information. If you have access to them, they are a great company to be a part of.

 

[Colleen27]

I don't get the connection between insurance and credit cards? Maybe it's an American thing. My insurance company knows nothing about my personal finances. They just based my policy on my claim history and the age/size/value of my home.

Yeah, its an American thing - insurers take credit scores into account for pricing insurance of all types. Technically you're not "punished" for having bad/no credit, you're just ineligible for the discount given to those with good credit, but the bottom line is the same.

AAA doesn't seem to be as bad for this as some. Progressive, Geico, and other places that advertise as "cheap" are much worse.

And Jeff_G - the practice has already been challenged in court in my state and the people lost. So long as it is phrased as a "good credit discount" rather than a "bad credit penalty" it is a perfectly acceptable way of doing business. Since insurers (and employers, and other businesses that use credit ratings for things other than making loans) don't pull a credit report on applicants, just a score, they have no way to distinguish between those who have bad credit through irresponsible habits and those who have a low score through disuse of credit.

 

[EKW]

I don't believe I was penalized at all when I signed up with AAA for insurance. They just pulled my driving record and gave me a quote off of that. Which BTW, until you visit with an agent and have them pull it, the computers will only give you a guestimate based off of other drivers in your area, age, and driving record. So a true quote would be in an office, not over the internet. My internet quote was nearly twice as much as what I got in the office.

How do you know you are being penalized? I would assume as a long time member, you'd have a greater discount for that. Are your rates comparable to other companies? Would it be in your favor to change? And do you think they'd work in a magic discount if you said you wanted to cancel? I'd assume that they only pull a soft credit report every few years. But I've never seen any one's insurance go up in price without outside factors, like moving, getting into an accident, or getting an new car.

My rates keep creeping up, so I called my agent. I'm a nonsmoker, have my renters insurance with the same company, and have a great driving record. I live less than 2 miles from where I work. My agent told me that the reason my coverage is so expensive is because of my credit rating. I know my rating is clean, and had no trouble getting approved for a car loan less than a year ago. When I mentioned this, she said it's because my rating is low because I don't use credit cards. Sigh.

This company always has some excuse. When I was in my 20's I was high risk because I was single. She tells me that dropped off when I hit my mid-30's. Did you know being a single female means you're a worse driver than your married friends? What a crock!

I'll try AAA this week! I'm a teacher, so I have the time to do the footwork this next week or two...before my summer PD's start. Thanks for the tip!

 

[EKW]

When you say they're penalizing you because you "don't use credit cards" are you referring to your credit score? I work for an independent agency and none of our companies care about credit card usage, but they do use credit scores as an underwriting tool. You have to have a high credit score to get the best rates.

It didn't use to be that way, but the insurance industry has changed and I don't see them going back to ignoring credit. Statistically speaking, people with bad credit are more likely to file claims. Unfortunately people with no credit get lumped in there.

If I were you, I'd work on improving my credit score. Open a card and use it at least once monthly and pay it off. It's not just insurance companies that look at credit, a lot of employers check your credit before they'll hire you. In this day and age it's important to have good credit.

My issue is that I shouldn't have to play their game. I have a huge distaste for credit companies after I saw what they do to the elderly. It's a looong story, but I cared for an elderly aunt for the last 15 years of her life. AT&T took a phone calling card, which was in my name, and switched it to a Mastercard in her name. (I had both names on the phone # so her siblings could find her via Directory Assistance.) I called them to tell them to switch it back and they refused, saying only she could close it. She was in her 70's and had the beginnings of dementia, and they convinced her to leave it open...telling her that she could charge whatever she wanted, and when she died it would all be paid off via some insurance they offered.

I tried again, telling them she was living on SS and didn't have the mental facilities to make a rational decision, but they told me that until I had Power of Attorney, they wouldn't talk to me.

10 years later they were willing to talk to me, when, due to her dementia she quit paying. I had to pay them $100 a month for a year to keep them from taking her to court. Before the year was up, she ended up having to move into a nursing home. When they wanted to set up another year's payments I refused, and, since I was only her niece, didn't have legal power over her finances, and she wasn't living with me, they couldn't make me pay.

I'd paid my own credit cards off and closed my accounts long before this, but this made me decide that I want nothing do to with these people...ever. I am a responsible citizen. I paid my own way through private high school and university. I spent years caring for my aunt and I've raised two children...all while living on what I make. I've paid off college loans and car loans. I shouldn't have to play their game to be treated decently! If having no claims or tickets in over 20 years doesn't prove I'm a good risk, I don't see how a credit card could!

 

[bumbershoot]

When I was in my 20's I was high risk because I was single. She tells me that dropped off when I hit my mid-30's. Did you know being a single female means you're a worse driver than your married friends? What a crock!

It's all based on statistics. And their stats show that younger, single people have more claims than older, married people. You're lucky you're not male, b/c it would have been worse!

Stats drive me nuts, of course. I lived on the "south side" of town, meaning I was 3 blocks from the main dividing line in Tacoma. I had an apartment in a secure building, with a locked garage where I parked. There were people who parked *all day* outside my apartment, and I could tell from their parking stickers that they lived on the north end, which is the better part of town. 3 blocks to the park, and you go one block past the park and you're on the better side of town.

I was paying much higher premiums, with my car parked inside a garage, than those people parked outside my building (they'd park and catch the bus to work, or they worked downtown and could walk from where they parked, all day, for free), because they LIVED in a better part of town.

Of course, when their cars were stolen or broken into, it was another black mark against MY part of town, not THEIRS.


I moved to the north side the following year...3 blocks, a park, and 2 blocks in, and my rates went down quite a bit.

The statistics show them that the other part of town had higher claims, so if you lived there you paid a higher rate. And the stats are what they go with.


(and for my husband, being older and married has indeed turned him into a better driver! he has more to live for now, and doesn't try to hit 100 mph anymore... nor does he "game" all night long and fall asleep on the highway...)

 

[sarahcoles]

There are a FEW companies - Travelers comes immediately to mind - that will review a "no hit" if you explain it to them, by an underwriter. You won't get "top tier".

But the BOTTOM line is, most people with no-hits have poor loss experience, or are newly licensed (same thing).

You do tend to see some depression era survivors that do that - don't do the bank thing, never borrow money, don't have a credit score, pay as they go. HOWEVER, at this point in time, they ALSO tend to be the over 70 set - VERY high risk from an auto insurance point of view. So credit score isn't as important, as they're going to either 1. get flat out declined from most carriers, based on their age or 2. going to get "standard rates" anyway, based on their age.

If she's under 65 and has been driving at least 10 years, do try shopping out to a Travelers agent, if they write in your area. If not, call a few local, INDEPENDENT agencies, tell them exactly what you outlined above, and ask if they have any carriers that will consider her situation. If she's over 65, you're not going to have much luck, sorry.

 

[eliza61]

How do you know you are being penalized? I would assume as a long time member, you'd have a greater discount for that. Are your rates comparable to other companies? Would it be in your favor to change? And do you think they'd work in a magic discount if you said you wanted to cancel? I'd assume that they only pull a soft credit report every few years. But I've never seen any one's insurance go up in price without outside factors, like moving, getting into an accident, or getting an new car.

Don't know about being penalized but as a general rule if they tell you they are pulling a credit report (which they have to disclose) then they are using your credit score in the formulation for a quote.

This is a general practice, yes I do know that not all companies don't do this.

 

[eliza61]

My issue is that I shouldn't have to play their game. I have a huge distaste for credit companies after I saw what they do to the elderly. It's a looong story, but I cared for an elderly aunt for the last 15 years of her life. AT&T took a phone calling card, which was in my name, and switched it to a Mastercard in her name. (I had both names on the phone # so her siblings could find her via Directory Assistance.) I called them to tell them to switch it back and they refused, saying only she could close it. She was in her 70's and had the beginnings of dementia, and they convinced her to leave it open...telling her that she could charge whatever she wanted, and when she died it would all be paid off via some insurance they offered.

I tried again, telling them she was living on SS and didn't have the mental facilities to make a rational decision, but they told me that until I had Power of Attorney, they wouldn't talk to me.

10 years later they were willing to talk to me, when, due to her dementia she quit paying. I had to pay them $100 a month for a year to keep them from taking her to court. Before the year was up, she ended up having to move into a nursing home. When they wanted to set up another year's payments I refused, and, since I was only her niece, didn't have legal power over her finances, and she wasn't living with me, they couldn't make me pay.

!

Not to sound cruel Beth but insurance is not an "individual" business. It's not about you. As some one else posted it's about statistics. Insurance companies would not and could not operate cost effective wise on a case by case, person by person state. Can you imagine the cost and time if the had to sort through every ones personal history?

Insurance (life, home, long term, auto) basically is a "risk" business. So they rely on statistic and studies. Studies show if you live in a "bad" part of time you have a higher risk of having a claim filed. You could be Mother Theresa spreading joy and happiness throughout the world but due to statistics you are 5X's likely to file a claim.

Same with people with bad credit score. statistically speaking they do file more claims than a person with a great credit score. That's a fact. So the insurance company will pay more money out to a person who has a bad credit score.

Maybe instead of getting mad at the insurance company, maybe you should direct your anger at the irresponsible (no not all) people who cause rates to go up.

 

[vicki_c]

I think you should focus long-term on getting your credit score up. Whether that means getting a secured card, or a credit card that you could charge a little on and pay off every month (and definitely get a copy of your credit report so you know what your score is).

Whether you want to play "the game" or not is your choice of course, but having a poor credit score is going to impact you in many ways beyond your insurance rates - including car and home loans, job opportunities, and more. So unless you're going to go off the grid, it's something you will have to deal with forever.

But I agree with the rest - they are not penalizing you for not using credit cards. But not using credit cards is apparently factoring into causing you to have a low credit score, the result of which is a higher insurance rate. It doesn't matter what the reason is for having a low credit score - they are looking at the number and that makes you indistinguishable from the person with a low score because they defaulted on their mortgage or skipped out on paying credit cards or whatever.

 

[sarahcoles]

Its strange that they have caught you up for just not using a Credit Card :O. I have been with the Farmers for two years now but never came across any credit card issue i too rarely use them.

 

[torinsmom]

I think using a credit score to determine your insurance costs is crazy. Yes, I know that research shows that people with low credit scores are more likely to have an accident, but I think companies should also look at the individual. My ex really did a number on my credit and I suffered for it in more ways than one. My rates were high AND I ended up paying the debt because he didn't. I had never had a ticket or an accident. To me, it's kind of like giving a higher rate to someone who drives a red car, because research shows red cars are stopped for speeding more often.

I used to have credit cards, but don't now. Renting a car is near impossible, and when I finally found a company in Orlando to rent me one, it was the smallest, oldest, stinkiest car in the fleet. Gotta figure something better out for next year.

 

[disneysteve]

I know that research shows that people with low credit scores are more likely to have an accident

I just wanted to correct this. No, it isn't that people with low scores are more likely to have an accident. It is that people with low scores are more likely to file claims. Those are two totally different things.

 

[sookie]

There are a FEW companies - Travelers comes immediately to mind - that will review a "no hit" if you explain it to them, by an underwriter. You won't get "top tier".

But the BOTTOM line is, most people with no-hits have poor loss experience, or are newly licensed (same thing).

You do tend to see some depression era survivors that do that - don't do the bank thing, never borrow money, don't have a credit score, pay as they go. HOWEVER, at this point in time, they ALSO tend to be the over 70 set - VERY high risk from an auto insurance point of view. So credit score isn't as important, as they're going to either 1. get flat out declined from most carriers, based on their age or 2. going to get "standard rates" anyway, based on their age.

If she's under 65 and has been driving at least 10 years, do try shopping out to a Travelers agent, if they write in your area. If not, call a few local, INDEPENDENT agencies, tell them exactly what you outlined above, and ask if they have any carriers that will consider her situation. If she's over 65, you're not going to have much luck, sorry.

i love travelors.

 

[torinsmom]

I just wanted to correct this. No, it isn't that people with low scores are more likely to have an accident. It is that people with low scores are more likely to file claims. Those are two totally different things.

Why would you file a claim if you didn't have an accident?