Credit scores and insurance.

Teigen, Anne

Most drivers know that a couple of traffic accidents or a long commute will cause their auto insurance rates to go up. But not as many know that a bad credit report can cost them, too.

All states, except New Hampshire, require drivers to buy a minimum amount of auto insurance. State law allows insurance companies to use a variety of information to determine the price of that coverage, including the driver's age and gender, the type of vehicle being insured and how much it's driven, the level of vandalism and number of car thefts in the driver's neighborhood, and even the climate and weather trends where the driver lives.

[ILLUSTRATION OMITTED]

In all but three states, insurers also use credit scores in determining how much drivers should pay. They cite numerous studies showing that credit scores are a statistically valid tool that can help predict the likelihood of a person filing a claim and the likely cost of that claim.

California, Hawaii and Massachusetts ban the practice. And in 2015, lawmakers in Michigan, Minnesota, Missouri, Montana, Ohio, Virginia and West Virginia introduced bills to do so as well. Proponents of these bills argue that using factors like credit scores disproportionately harms low-income drivers and can even price them out of the insurance market. None of the measures passed, but some may carry over into 2016.

Lawmakers are also considering what other kinds of personal information should be protected. In New Jersey, for example, legislation introduced in 2014 would prohibit the use of education and occupation as rating factors. In Minnesota, lawmakers considered a bill last year to prohibit discrimination in auto insurance based on where the driver lives within the Minneapolis-St. Paul metropolitan area, and in New York, lawmakers attempted to prevent insurers from increasing premiums for drivers 60 years of age or older based solely on their age. Maryland has a similar law on the books for people over age 65. A South Carolina measure that failed would have prohibited increasing a driver's premium until after the driver was convicted of, not just charged with, the violation.