why do people with no credit history get penalized by insurance companies on their rates?

lymanspond: why do people with no credit history get penalized by insurance companies on their rates?
My aunt has her own home paid for, has never used credit of any kind, is being penalized by auto insurance companies for having what they call a “no hit credit history”. if her fico score was higher her rates would be lower. it would seem that she has been more responsible, by not using credit. It is a $ 400.00 extra charge because or her willingness to avoid debt. and no she does not want any credit cards. are there any insurance companies that just go beyond a fico score and actually ananlize someones net worth as a means to being responsible, how about that she pays her auto insurance in full

Answers and Views:

Answer by bighelp
i would call around to many insurance companies, especially larger ones and meet with an agent. if that doesnt work look for an independent agent that represents many companies. Unfortunately she fell into the category many older Americans do in that computers analyze credit not ages. People with no credit have no record that they will pay their bills. Its a dumb thing they check but insurance companies, like any company, love to find new ways to charge you more.

Answer by mbrcatz17
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.

Paying the bill in full will only avoid the billing charges.

Answer by summmmertyme
Sounds like she is dealing with an insurance company instead of an insurance agent. Have her go to a local insurance company and sit down with an agent to find out her insuring needs. She should not be penalized for no credit.. Only claims really affect the rates.. Unless their at a real yound age then there is no age history. Now I know Farmers Insurance is a conservative company . Give them a try. I think the Farmers Insurance agents carry pride in selling their policies upon a Friendly Review.. Stay away from insurance on line or by 1 800 numbers.. Find a local agent… thx