Maryland Rejects Bill Banning Auto Insurance with Credit Scoring

The Maryland legislature rejected a bill that would have imposed a ban on the use of credit information in rating auto insurance. Reports show that the legislation failed to even reach full chambers of both Houses of the Maryland legislature, being rejected within the Senate Finance Committee and House Economic Matters Committee.

Why Maryland Legislature Rejected the Bill

While Maryland has one ofthe most restrictive laws in the country when it comes to insurers using credit information in underwriting and rating auto insurance, it seems the desire to extend the restrictive laws any further is something the legislature is not willing to consider.

Currently, the law prohibits Maryland private passenger auto insurers from using credit information for underwriting, but allows the information in rating new policies within 40 percent rate collars (either a surcharge or discount of up to 40 percent). So the idea of banning all use of credit scoring was a no-go for the legislature.

Other States Oppose Credit Scoring

While Maryland is not willing to allow for an all-out ban of the use of credit scoring, other states have considered it as major problem. For instance, Michigan residents and lawmakers have fought credit scoring for some time because they believe it and other factors unfairly affect auto insurance rates.

What’s interesting though is that manycar insurance companies use what is known as an insurance score, which is based on the credit score. So even if they’re not using and outright credit report and score, they may have access to similar information to make their determinations.

If you live in a state that allows insurers to use credit scoring to determine your rates, you could consider a pay-as-you-drive option that bases its rates on how you drive now and not much else. Also, you could shop around for cheaper coverage to find better rates. That way, you won’t feel imprisoned by the laws of your land.