Credit and Insurance

In Illinois, insurance providers can use your credit report when determining the price of your insurance. In addition, providers can use your credit history to decide whether or not to provide you with insurance or to renew and/or cancel an already existing policy. While many insurers will use other factors to determine your rates such as where the property is located or how the space will be used, Illinois law stipulates insurance companies can base their decisions solely on your credit rating.

The upside to this practice is that if a provider is unwilling to cover you individually, your organization or your business, they must offer you alternative coverage through another insurer. Unfortunately, in situations where you were denied a renewal on an existing policy or it was cancelled, the alternate policy does not have to provide the same amount of coverage or identical terms and conditions as the original policy. This is also true in cases where you were seeking to establish a new policy and the provider denied you coverage.

If an insurance provider uses your credit information to determine your premium rate, they must inform you of this at the time of your application. For detailed information about the laws concerning insurance and credit, contact the Division of Insurance’s Consumer Assistance Hotline at 866.445.5364 or via their Website.

TIP: When comparing policies, make sure you are comparing apples with apples. What may look like a bargain may actually leave you under-insured once you factor in all the costs, deductions and stipulations.

TIP: You can get all your insurance questions answered by the Illinois Division of Insurance by contacting the office directly at 866.445.5364 or via email at director@ins.state.il.us.

TIP: Financial planning guru Suze Orman offers a host of resources to help locate and buy insurance coverage, especially health and life insurance.