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Auto insurance rates collide with credit

Jay MacDonald As I took my life in my hands the other day and ventured out onto notorious Highway 19, my mind veered a hard right onto the concept of "auto insurance."

Highway 19 is the multilane hell-scape near my home that leaps, swerves, screeches to inexplicable halts, randomly merges with malice and generally careens full-throttle in a Mad Max attempt to connect the sprawling fiefdoms of Pinellas County, Fla.

I don't know what I was thinking, but it probably involved fast food.

“Do I care about the credit score of the guy about to ram me? Hardly.”

Mind you, this is the new, improved U.S. 19. Back when it was a mere terminally congested arterial, it spawned a healthy business in bumper stickers that pleaded, "Pray for me. I drive 19."

Whilst white-knuckling all the way to Wendy's, I came up with this quick roadside quiz: If you were in my Chuck Taylor All-Stars, what would concern you the most about the driver of the SUV in your rearview mirror that's showing no signs of braking as it closes fast on your rear bumper?

  • A: I wonder if she's just stumbled out of an all-night beer pong marathon?
  • B: I wonder if she's just received a life-altering Tweet from her BFF that has temporarily ripped a hole in her space-time continuum.
  • C: I wonder if one of the soccer mom's five little kickers just inhaled a Nerd, setting off a mad scramble aft, resulting in a temporary vacancy at the helm?
  • D: I wonder what her credit score is?

Now if you're like me, you're a lot more concerned about A, B and C than you are with her FICO score.

If your mind immediately went to D however, you're probably an insurance agent.

Making the poor pay

There has been little uproar over reports that auto insurers have taken to analyzing your credit score before deciding what premium to charge you.

Here's the logic: Folks with higher credit scores typically make more money -- money they are willing to part with to settle fender benders without filing a claim that will cost their insurer. Folks with lower scores tend not to have that kind of dough to throw around, so they file claims.

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If you're an insurance company, it just makes good business sense. I have a few insurance giants in what's left of my 401(k) and I want them to run a tight ship, too.

But the doubting Thomas in me (as in Dave Thomas, founder of Wendy's) can't help but wonder whether this is simply a convenient way for insurers to offer enticing rates to the rich while forcing the poor to pay full freight for auto coverage.

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