For Consumers

What you need to know about Washington state’s rule banning credit scoring in insurance

On June 20, 2021, we issued an emergency rule to ban the use of credit scores to set rates for auto, homeowner and renter insurance policies. This means insurers cannot use your credit score to determine how much you pay for auto and homeowners insurance. 

Why credit scoring is temporarily banned

The federal CARES Act (www.treasury.gov) placed a temporary hold on the use of credit scoring in recognition of the pandemic’s impact on peoples’ credit. As a result, credit bureaus are currently collecting a credit history that is inaccurate for some consumers and producing unreliable credit histories. Insurers rely on these credit histories to produce their scoring models and set rates for their policyholders. We believe these scoring models are now unreliable.  

What this means for you

Your insurer must rely on other factors to set your rates, such as how you drive, the number of miles you drive, how you maintain your property, how your home is constructed and the number of claims you filed. 

The emergency rule requires insurers to revise their rating methods, but not all changes will be immediate. You may see premium changes when your policy renews, or immediately if you shop and decide to buy coverage from a new company. 

What you can do

Insurance is a very competitive $47 billion industry in Washington state. Consider shopping for a better deal – especially if your company is increasing your premium. You have the best opportunity in two decades to get better deals on auto and homeowner policies since insurers can no longer use credit scoring. Your premium will depend on more predictable factors like how you drive, what material your house is made of and if you file a claim. Companies should be willing to review policyholders’ coverages to determine potential savings. The company that provided the best rate a year ago may not do so today.