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Credit Freeze Could Cause Increase in Insurance Premiums

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People who have frozen their credit because of the Equifax data breach, could see an increase in insurance premiums.

Insurance agent James Castell is warning consumers about freezing their credit in reaction to the Equifax hack.

“A lot of my clients in Sequim have put freezes on their credit in the past before the Equifax. And I’ve seen it take some pretty adverse actions where their premiums would go all over the place,” said Castell.

Insurance companies have used credit scores to determine premiums for homes, cars and boats for years.

Castell says he has seen renewal rates jump as much as $400 a year because an insurance company wasn’t able to access a customers’ frozen credit file.

“This could be tens of millions of people across the country that don’t know it’s going to have that effect on them,” Castell said.

Castell is concerned some consumers may not realize they have been impacted, “for a vast majority of people in the US their homeowners is wrapped up into their mortgages. So they don’t pay the bill physically themselves, they just pay it through their monthly mortgage payment.”

Kenton Brine from the Northwest Insurance Council, says insurers need to see credit information regardless of the Equifax situation.

“If they can’t access your credit information because you have a freeze on, you might not enjoy the best discounts that you would otherwise,” said Brine.

Washington Insurance Commissioner, Mike Kreidler, says it’s wrong that insurance companies can raise consumers rates if their credit files are frozen, as a result of the Equifax hack.

“That’s just plain not right, it’s not fair, quite frankly it’s illegal.  And I want to make sure they understand that is not how we are interpreting the law,” said Kreidler.

As a result of our report, Kreidler says his office says will now investigate the insurance companies current use of credit scores.

“And if they are going to use it, I want to make sure it’s not held against somebody because Equifax got hacked,” said Kreidler.

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