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Natural disasters could cause difficulty when trying to pay off debt, which could increase insurance rates
01/31/2010
Consumers who are facing rising credit card debt may end up hurting their credit scores, which could make it more expensive for them to do business with insurance companies.
Though a lack of personal responsibility may lead to a drop in a credit score, some more unavoidable occurrences could do it as well. For example, being the victim of a natural disaster could make it hard to pay bills, which could reduce a credit score.
However, a bill suggested in Iowa may limit the practice of insurance companies raising premiums in relation to credit scores that have dropped because of certain significant problems a person faces in their life, including military deployment or a death in the family.
If passed, consumers would be able to contest an increase in their premiums if the hike is tied to a drop in a credit score that resulted from these difficult situations. Insurance companies would also have to tell their customers when a credit score change is going to raise rates.
Though a credit history may factor into insurance premiums, there are other consequences consumers may face if they cannot pay off debt. Included in those is the fact that it could be more difficult for people to find a job as employers pay more close attention to a person's financial situation.
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