Report: Safe Illinois Drivers with Poor Credit Pay $491 Annually in Higher Car Insurance Premiums

Consumer Federation of America released a new report today detailing the impact of auto insurers’ use of consumer credit information on good drivers with only fair or poor credit scores. According to the report, Illinois consumers with clean driving records and excellent credit pay an average annual premium of $424 for state-mandated auto insurance. But consumers with fair credit pay an average premium of $607 — with the same driving record. And good drivers with poor credit pay an average premium of $915 — a $491 or 116% increase compared to drivers with excellent credit.

State Rep. Will Guzzardi (IL-39), backed by the Illinois Coalition for Fair Car Insurance Rates, has introduced legislation that would bar insurers from utilizing credit information when setting car insurance rates, among other reforms. 

“Once again, the data bears out that excellent drivers are being charged staggering premiums only because their credit scores are low,” said State Rep. Will Guzzardi (IL-39). “This is discrimination, plain and simple, and it means that low-income drivers of color are paying more than their wealthy white counterparts. States need to regulate this kind of unfair pricing practice, and I plan to work hard to see that Illinois does so.”

Evidence also shows that insurers, on average, consider credit information a more important rating factor than a consumer’s driving record. In Illinois, consumers with perfect driving records and poor credit pay $862 more for auto insurance on average than drivers with a conviction of driving under the influence of alcohol and excellent credit. 

The overwhelming majority of auto insurers practice this discrimination. Only California, Hawaii, and Massachusetts prohibit the use of credit information in auto insurance pricing. 

“Your auto insurance premium should be based on your driving record, not your credit score,” said co-author Michael DeLong, CFA’s Research and Advocacy Associate. “You shouldn’t have to pay more in premiums because of a factor unrelated to your driving, and as long as companies are allowed to use credit this way, millions of safe drivers in America are being overcharged for their auto insurance.” 

The report comes just after Northbrook-based Allstate filed for its third Illinois car insurance rate hike this year. With the 11.2% increase, which goes into effect August 17, Allstate will have raised Illinois car insurance rates by $160 million in 2023, after raising rates by $229 million in 2022. Top insurance companies have now collectively raised IL car insurance rates by more than $1.7 billion in less than two years. 

Unlike every other state but Wyoming, Illinois regulators have no power to reject or modify excessive rate hikes. 

“Illinois requires car owners to purchase insurance, but is not doing enough to protect consumers from excessive or unfair rates,” said Illinois PIRG director Abe Scarr. “Your insurance rates should be based on how you drive – not who you are.”

Illinois drivers who wish to improve or maintain their credit score can refer to PIRG’s guide on maintaining a good credit score and guide on how to find mistakes in their credit report.