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Why do car insurance firms increase policy premiums for people with poor credit history?

 

I just went online to check out my renewal costs on go compare - my new premium would be £520 - thats with 9 years no claims and 1 accident

 

So I entered exactly the same details again and the only detail I changed was the name of the driver (made up a name) the address, car, annual mileage etc all stayed the same and the new quote came in at £380

 

As a previous discussion I had with an insurance firm the person stated that they only do a CRA check to confirm your details - but its quite clear they are using a poor credit rating to up the costs

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Not sure comparison sites would check your credit history for calculating premiums. They might do so to check your identity. I know that some Insurers do use credit record information in part to calculate premiums. It might also inform them whether to offer monthly paymens and if so what interest to charge, if it is variable.

 

Under Data Protection, they have to tell you how your information will be used. If they failed to do so, they would be in breach of the Data Protection Act.

 

I just wonder whether it is either just the Insurers system calculating different premiums, as the rates are not static. Or whether the annual amounts shown are based on you paying monthly. So with your correct name, it wants to charge more for monthly sums increasing the annual amount paid. When you change the name, it does not pick up anything adverse from credit records, so offers better monthly payments, so a lot less over the year.

 

I think it is terrible that some Insurers do penalise those who have had financial issues, by making it even harder.


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I don't believe it's anything to do with paying monthly. My credit file is checked every single time I renew my insurance even though I have been with the same company for over ten years and always paid the full premium up front. As I'm never asking for credit I can't understand the need for such checks and the insurance company have never managed to furnish a good reason. It boils down to 'because they can'.

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It boils down to 'because they can'.

 

You really have hit the nail fare and square on the head there. They are already on a good screw the govenment giving them extra by making it law that cars will at all times be insured unless sorn.

 

It's not just car insurance though, it all types of cover. Look at the terms in these rip-off over 50 plans where your terminal value decreases because of inflation, if you miss a payment the policy ends with no refund and you have to pay the premiums for life so can pay in 3 or 4 hundred percent more than you will get back and if you live till over 100, you only get a couple of hundred back.

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