SB0017 Seeks to Prohibit Insurers from Using Credit History to Determine Insurance Premiums

Bad credit can affect one’s life in many negative ways.  Soon, however, bad credit history may no longer have a negative impact on Marylanders, as it relates to motor vehicle insurance policies, thanks to Senate Bill 0017 (SB0017).  

Currently, subject to certain provisions, an insurer may use the credit history of an applicant, in whole or in part, to rate a new policy of private passenger motor vehicle insurance.  See Md. INSURANCE Code Ann. § 27-501(4).  Insurers “may not use a factor on the credit history of the applicant that occurred 5 years prior to the issuance of the new policy”; must “advise an applicant at the time of application that credit history is used”; and must “on the request of the applicant, provide a premium quotation that separately identifies the portion of the premium attributable to the applicant’s credit history.”  Id.  

SB0017 seeks to prohibit “an insurer, with respect to private passenger motor vehicle insurance, from rating a risk based, in whole or in part, on the credit history of an applicant or insured in any manner.”  See SB0017.  This amendment would no doubt be a welcome relief for Marylanders who might not have stellar credit history, so that this factor would not hinder their ability to obtain something as important as motor vehicle insurance.

--Letam Duson, Associate Attorney