When it comes to car and home insurance, insurance companies rely on data found in a consumer report, to set rates or decide whether to offer insurance at all. Like a lender considering a loan application, insurers use credit reports to make decisions. That’s why it’s crucial that all the information in your file is accurate.
Credit Scores
Insurers licensed in North Carolina to sell automobile and residential insurance can use your credit score to determine premiums. While insurers can use credit scoring as the sole basis for determining a customer’s rate, they may not use it as the only reason to terminate a policy or charge rates higher than approved by the North Carolina Department of Insurance. However, insurers generally use a more specific type of consumer report, such as the insurance consumer report, to support their decision-making.
CLUE reports
A Comprehensive Loss Underwriting Exchange (CLUE) consumer report is unique to the insurance industry. Compiled by LexisNexis, it contains pertinent personal information and claims history, including:
- Dates of claims and losses
- Types of loss
- Claim denials
- Amount paid for approved claims
- Property/vehicle information
The report details a consumer’s claim history over the past seven years, and insurers rely on it (in part) to determine rates. CLUE records are considered consumer reports and, as such, are subject to the Fair Credit Reporting Act. A thorough insurance consumer report can help ensure fair decisions by insurers.
The Fair Credit Reporting Act
Whether a standard credit or CLUE report negatively impacts you, you have key rights that stringently protect how your information is used and who can access it and emphasize the importance of accuracy. Enacted in 1970, the Fair Credit Reporting Act (FCRA) provides the following rules for consumer reports:
- You have the right to access your credit file.
- You can request your credit score from consumer reporting agencies.
- You must be informed if information in your credit report has been used against you.
- You are protected from unauthorized credit pulls– the FCRA requires prior express written consent to run these reports.
- You have the right to dispute inaccurate or incomplete information in your credit report.
- Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information.
The penalties for violations can be high. A company that violates the FCRA can be liable for actual damages, statutory damages, legal fees, and possibly punitive damages.
What Goes Wrong
Every type of consumer report has the chance for error. Unlike background checks that probe criminal history, insurers typically seek information identifying your risk through an insurance consumer report. Some of the qualifications they look for and may go wrong on a credit or CLUE report include:
- False claims – An agency is reporting you made a claim to your insurer that did not occur. This is one of the ways the company assesses your rate because of how likely you are to use the insurance they provide.
- Identity theft – Claims may be the result of stolen identity.
- Outdated information
- Misleading information
How to Dispute Errors
If a CLUE or credit report negatively impacts you, you have recourse. A company may take “adverse action” based on a report- however, they must also provide you a written notice. The notice must have:
- The reason for the adverse action (insurance denial, rate increase, etc.)
- The contact information for the credit bureau or company that provided the information.
- A statement describing your rights to obtain a copy of your report and to challenge the results.
If you believe that inaccurate or outdated information is on a report, your first step is to request a copy. Consumers are entitled to one free copy of their LexisNexis CLUE report annually. Visit LexisNexis or call them at (866) 312-8076 to request it. Carefully review the report for errors and contact the reporting agency (the insurer or LexisNexis) to investigate them. Contact our dedicated consumer protection attorneys immediately if the report is not corrected.
Insurance Consumer Report Lawsuits
Your credit and insurance history have significant impacts on your financial well-being. Whether you’re denied a loan or unable to obtain insurance, inaccurate and outdated information on a report is a serious violation of your rights. If you have suffered financial losses such as higher insurance rates or denial of service due to an inaccurate CLUE or credit report, contact Maginnis Howard. We can file a lawsuit on your behalf and will investigate all parties involved to hold them accountable. An attorney can handle the burden of dealing with the court system and uncooperative companies.
Contact US
The experienced consumer protection attorneys of Maginnis Howard offer free consultations for FCRA cases. If we take your case, we will do so contingently. That means you don’t pay anything unless we recover a settlement or verdict on your behalf. Contact us today or visit our Raleigh, Charlotte, and Fayetteville offices. We represent clients across the Carolinas and Virginia.
