Saturday, March 21, 2009

American Family Insurance … Again

Last year I wrote about the annoying survey American Family Insurance spent tons of money on and sent out to policyholders rather than just call customers to see how they were enjoying their service and agent.

Now I’m griping because we got a letter from them saying they “may use a credit-based insurance score based on information contained in [our] credit report(s).”

I know someone who had their insurance rates go UP because they had bad credit. I’m sorry, but I think insurance should cost the same (based on number of tickets, age, etc., of course) for everyone, regardless of how bad or good their credit is. Our credit is great, so I’m not worried about our rates going up.

But maybe I should be. Maybe they raise the rates of people with BAD credit because they are a risk and those with GOOD credit because they are responsible with their money and possibly have more of it. I like to think most people with bad credit are working hard to pay off their debt, so why should they be penalized and charged more for that?

I feel for these people. When I was in my early 20s and had just escaped from an abusive marriage with the clothes on my back, the guy wouldn’t pay his bills, so creditors came after me. Even though I didn’t end up with any of the stuff, I worked hard and paid off the credit cards and even the IRS so they would leave me alone and not mess up MY credit for what HE had done.

Is your insurance company pulling this crap? How can we stop it?

*Follow-up since I wrote this post … they LOWERED our rates by about $40 every 6 months on my husband’s 1994 truck. I want to know who is paying for our lower rates now? Do you think this is fair?


  1. Okay so I used to work for an insurance company. Here is my 2 cents worth.

    Almost all insurance companies use your credit to help determine rates. There is a direct statistical link to poor credit and higher claims. With that said be glad that is how your insurance does it or those of us would good credit would have higher rates to pay for those that have the lower credit rating and higher claims.

  2. i don't care about the statistical link between po people and higher claims. if the po people with bad credit are paying their bills on time, why should they be penalized?

  3. It is no different than charging higher rates for a 16 year old boy. Why should you be penalized for having a boy? How about charging higher home owner insurance premiums in Florida? Insurance is about risk. Rates have to be set to cover the risk they present. Poor people aren’t penalized…people that have not taken care of their credit and responsibilities are being penalized. They are being penalized because the likelihood of them having a claim is higher than someone with good credit. Much as the likelihood of a 16 year old having a wreck is higher than a 40 year old. That is how rates are set. Insurance is full of discrimination that is what makes it work. Believe this discrimination works for you. Your rates would be unaffordable if we were all in an equal pool.

  4. very interesting, and i'm starting to grasp it. this is just another reason why i blog: to learn new things. thanks for sharing with this harry potter loving sinner! next let's talk HEALTH insurance ... how come someone at my husband's work with 1 kid pays the same as us with almost 5??? let's tawlk amongst ourselves.

  5. Thank you for explaining about insurance works. You did a good job to help me understand it as well!

  6. I don't know much about health insurance. It is not uncommon to see one rate for family. How that is fair though I do now know.


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