Can Credit Scoring Influence Kentucky Auto Insurance Rates?

Kentucky state drawn on a chalkboard
Kentucky auto insurance companies can use a motorist’s credit score for underwriting and rating purposes, to an extent. A resident’s credit can influence an insurer’s decision to issue a new policy or renew an existing one and can be a factor when determining a motorist’s risk level. However, a motorist’s credit cannot be used as the sole basis for nonrenewal, coverage refusal, or policy cancellation.

Many Kentucky car insurance companies examine policyholders’ financial information because they feel that it’s a quick and inexpensive way to assess risk. Theoretically, if motorists have poor credit and a history of late payments, they have an increased likelihood of filing a claim or being involved in an accident. This usually results in higher premiums.

Thanks to the Fair Credit Reporting Act, insurers must inform motorists if their credit information has lead to an “adverse action.” If so, the insurer must tell the motorist in question the name of the national credit bureau that provided the information so that the motorist can correct any errors.

If a motorist’s premium has been adversely affected by a poor financial rating, vehicle owners have the option of requesting that their coverage provider re-evaluate their score when the policy is up for renewal. To avoid higher coverage costs and adverse actions from insurers, KY motorists are encouraged to periodically review their financial history by requesting a free copy of their credit history from a national credit bureau. Typically, scores can be negatively affected by outstanding debts, bankruptcy, foreclosures, liens, and poor payment history.

If a negative financial background has made it difficult to find a top rated car insurance company willing to provide vehicle coverage, residents may want to consider the assistance of the Kentucky Automobile Insurance Plan (KAIP). This program was created with the intent of helping motorists in KY find adequate coverage to meet state financial responsibility requirements. To qualify, motorists must first certify that they have been refused service by an insurer within the last 60 days, provide a premium deposit, and maintain residency in the Bluegrass State.
Kentucky postage stamp
Through KAIP, motorists are assigned a coverage provider. Unfortunately, because vehicle owners are not given the option to shop around and compare quotes before being assigned a company, premiums are likely to be higher than they would be for the average policy. Residents are encouraged to continue shopping around for adequately priced protection. If a more affordable plan is located, residents can cancel their KAIP policy at any time, coverage costs will be prorated, and money due will be returned.