A
new report by the Consumer Federation of America has found that homeowners with lower credit scores in certain areas are paying more for insurance than those who live in disaster-prone regions but have higher credit scores. The study, which assessed data from nearly every U.S. ZIP code, revealed that consumers with low credit scores in Pennsylvania, Arizona, and Oregon face the largest penalties.

    The report's authors argue that this practice is unfair and are calling on legislators to ban the use of credit scores in determining home insurance premiums. Currently, three states - California, Maryland, and Massachusetts - have laws prohibiting the use of credit scores in home insurance pricing.

    However, the American Property Casualty Insurance Association (APCIA) disputes the report's findings, claiming that using credit scores to determine insurance premiums ultimately saves consumers money. The APCIA argues that this practice allows insurers to evaluate risk more accurately, leading to savings for homeowners.

    The CFA and other consumer groups counter that insurance companies artificially inflate base rates to make up for the "credit penalty" they charge low-scoring customers. They argue that this practice is unfair and that consumers should not be penalized for their credit history when it comes to home insurance premiums.