Insurance Scoring and What It Means for OregonConsumers
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UPDATED: Nov 15, 2020
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Oregon's Insurance Scoring
It seems that no matter where people go today, someone is accessing their credit report. Gone were the days where only potential credit or loan officers could look at a report and credit score to determine a consumer’s level of risk. Today credit card companies look at reports to see whether or not to market to new markets.
Potential employers look at reports to try to make a decision on an applicant’s ability to be practical and responsible. It is also common for car insurance companies to look at an individual’s credit before deciding whether or not to approve or quote a policy.
In practical terms, a person’s credit report can say a lot about the level of risk involved in doing business with them. However, a credit report is only a piece of paper and information can easily be construed. One of the major problems with accessing a report or score is that it doesn’t give the consumers a chance to respond, explain or defend themselves. The report is the bottom line and many people seeking car insurance may find difficulty getting legally mandated car insurance or getting a rate that they can actually afford.
Each state sets their own laws determining what insurance companies are allowed to access and used when working with potential or existing customers. The Oregon Insurance Division has determined that auto insurance companies in their state be restricted in terms of what credit reporting data they use when signing up or renewing customers. Oregon car insurance companies do not have the liberties that some other states have. In other states, an insurance company could use the credit report or score of existing customers in order to raise rates, cancel policies or refuse to renew policies.
Oregon allows car insurance companies to use the information only when determining whether or not to accept an insurance application. Even that permission has limits since the state of Oregon forces companies to document the level of risk of the potential customer and use a diverse evaluation system so that credit score is not the only determining factor when pricing or refusing a new policy.
The company must also make certain that consumers are properly notified before they run any credit checks so that the individual understands that the information will be accessed and possibility used to determine eligibility. If the data is the determining factor in the decision to accept or deny the driver insurance, the company must notify the consumer and specifically inform them on why the adverse or negative decision was made.