Report: Texas Homeowners Insurance Rates Higher For Those With Poor Credit

A recent report in the Dallas Morning News showed that homeowners with poor credit can expect to pay more than double the Texas homeowners insurance rates of their neighbors with excellent credit. The report showed that homeowners with credit problems paid an average of 50 percent more for their Texas homeowners insurance rates than those with good credit, despite owning similar homes in the same neighborhood. In one instance, a provider quoted the prospect with poor credit a rate 2.5 times higher than a similar customer with good credit.

Details of the Texas Homeowners Insurance Rates Report

The report analyzed Texas homeowners insurance rates for numerous ZIP codes in the Dallas-Fort Worth Metroplex. The researchers submitted data to 34 major insurers regarding a policy for a ten-year-old brick veneer home. The hypothetical home had no insurance claims in the last five years and was valued at $200,000. The only differences submitted to each insurer were in the ZIP code and the credit score. The report showed the Texas homeowners insurance rates given by Allstate, Farmers, Liberty, Safeco, State Farm, and USAA.

Texas Homeowners Insurance Rates Show Wide Variations

The lowest Texas homeowners insurance rates from the report were from Allstate for a home in South Dallas. The company gave a quote of $894 a year for a homeowner with good credit, while the annual Texas homeowners insurance rates for a homeowner with poor credit was nearly $1,300, an increase of nearly 45 percent. For a home in North Dallas, Safeco gave a quote of just over $1,900 for an applicant with good credit. The prospect with poor credit received a quote of over $4,500 for the same house, nearly 2.5 times the rate for the applicant with good credit.

Do Texas Homeowners Insurance Rates Punish Minorities?

Consumer advocacy groups, as well as some civil rights activists, claim that insurers that use credit ratings to set Texas homeowners insurance rates are discriminating against minorities. The newspaper report showed that 90 percent of the customers that qualified for the best Texas homeowners insurance rates were white, while only 5 percent were Hispanic and 2 percent were African-American. Among the customers with the worst credit ratings, 28 percent were Hispanic and 33 percent were African-American.

Insurers Defend Texas Homeowners Insurance Rates

Despite numerous complaints from consumer groups that credit scores should not factor into determining Texas homeowners insurance rates, the insurance industry continues to defend the practice. Mark Hanna, a spokesman for the Insurance Council of Texas, told reporters that a customer’s credit history is “consistent, reliable and highly predictive of future losses.” Mr. Hanna maintained that insurers use various factors, including credit scores, in calculating Texas homeowners insurance rates.

Source: Dallas Morning News

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