Insurers double premiums for homeowners with poor credit

Homeowners with poor credit pay twice as much for homeowner’s insurance as those with excellent credit, a new study revealed. The study, conducted by insurancequotes.com, showed that homeowners with fair credit pay 32% more than those with excellent credit, up from 29% in 2014, while premiums of those with poor credit may increase by 100%, up from 91% in 2014.

Homeowners with poor credit pay at least twice as much as those with excellent credit in 38 states and Washington, D.C. The highest in the nation is West Virginia with a 202% increase, followed by Washington, D.C., with 185%, then Montana with 179%.

Insurers are prohibited from using credit to calculate homeowner’s insurance premiums in three states: California, Massachusetts and Maryland. In Florida, credit does not normally affect premiums, but insurers are technically allowed to take homeowners’ credit scores into consideration.

“In most states, insurers are putting more emphasis on credit scores this year,” said Laura Adams, insuranceQuotes.com’s senior analyst. “The impact of a poor credit score is higher now than it was last year in 29 states and Washington, D.C., while it is lower in just 17 states. It’s more important than ever for people to maintain a solid credit rating by paying their bills on time, keeping their balances low and correcting errors on their credit reports.”

Montana, Texas and Washington, D.C., showed the greatest difference in increases when credit drops from excellent to fair. Montana showed a 66% increase, Texas a 55% increase and Washington, D.C., a 61% increase.

[Related: Here are the 10 states where people pay the most for insurance coverage]