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How your credit score affects car insurance in different provinces

July 5th, 2018  |  Personal Finance

Your credit score plays a huge part in many financial decisions you may make-from getting a loan to applying for a mortgage. While you might anticipate that a bad credit score will hinder your chances of making big purchases, or accessing a new line of credit, you probably wouldn’t think it comes into play when you’re hunting for car insurance.

Will my insurer always check my credit score?

In short, no, your credit score won’t always be checked by your insurer and this is largely down to where you are.  In some parts of Canada it is against the law for car insurance companies to delve into your credit history during your application, and during the claims process.  

In these provinces your insurer will only have your driving history, age, address and the type of car you drive to decide how much you will charge. In others, they can consider individual financial risk factors too, including your credit score.

Which provinces allow an insurer to check my credit score?

There are some provinces where legally an insurer has the right to use your credit history to determine insurance rates. In British Columbia and Manitoba there are no rules and regulations about an insurer looking into your credit history, largely because insurance is regulated provincially in these areas. In Nova Scotia and Saskatchewan, however, while private insurance companies are available, they are still allowed to look into your credit history before determining how much your premium will be. Meanwhile in Alberta and Quebec, although an insurer is legally allowed to check your credit score, they must get explicit customer consent before they do so. Customers are within their rights to decline and your insurer must still provide a policy estimate. Having a credit check taken out by an insurer can either help or hinder your insurance application.

Where are insurance credit checks banned?

In both Newfoundland and Labrador, New Brunswick and Ontario, it is illegal for an insurance company to use your credit score against you when determining the cost of your auto insurance premium. In fact, in both Newfoundland and New Brunswick it is illegal for any type of insurer, including home insurance, to use it against you.

Can I save money if I let insurers look at my credit score?

In some cases you can make some savings if you let your insurer take a look at your credit score. As you might imagine, this is usually if you already have a good credit score. On the other hand, if your credit history isn’t quite as clean, you may end up with a higher rate. If you have a decent credit score and live in a province where your credit score can be used to determine your premium, but is optional, it might be worth sharing the information and reaping the benefits.

For the most part,  the factors that will play the largest role in how much you pay will include your age, make and model of your car, driving history and your address, as well as whether insurance is publicly or privately regulated.  

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