New Mexico’s Personal Insurance Credit Information Act Takes Effect

New Mexico Personal Insurance Credit Information Act (PICIA) took effect January 1, to help protect consumers’ and insurers’ use of credit. According to the Rocky Mountain Insurance Information Association, PCIA requires insurance companies to limit the use of credit information when selling, rating or renewing auto or homeowners insurance. It also provides strong protections for New Mexico consumers.

RMIAA says the new law helps protect New Mexicans by:
* Insurers that use credit information must disclose this fact to consumers at the time of application.

* Insurers cannot deny, cancel or fail to renew coverage based only on credit information.

* If a consumer does not have a credit history, or if an insurer is unable to determine a credit-based insurance score, the insurer is required to give that consumer an average or better than average rate or calculate a premium for that consumer without using credit information.

* Insurers that use credit information must take into account the effect on a consumer’s credit of any “extraordinary life circumstance,” including: an acute or chronic medical condition, illness, injury or disease; divorce; the death of a spouse, child, or parent; involuntary loss of employment for more than three consecutive months; identity theft; loss that makes a home uninhabitable; and other circumstances prescribed by the New Mexico Insurance Division.

* If an insurer denies, cancels, increases a consumer’s premium, or decreases a consumer’s coverage or amount of insurance based on the consumer’s credit information, the insurer is required to send what’s called an “adverse action” notice explaining the reasons for their action as well as the insurer’s exceptions and procedures for “extraordinary life circumstances.”

* Insurers cannot use a credit-based insurance score to deny, restrict or alter the fees charged for a premium payment plan.

* Insurers cannot use a consumer’s income, gender, address, race, color, national origin, religion or marital status as a factor when determining a credit-based insurance score.

* If an insurer uses credit information upon renewal of a consumer’s policy, a consumer may request the insurer obtain current credit information and recalculate the credit-based insurance score.

Factors that may be used in rating are prior insurance, age, driving record, marital status, vehicle type and age, where the vehicle is garaged, proximity of your home to a firehouse, and the number of cars on a policy, among others.

People who pose a higher risk may receive a higher rate, according to RMIIA. Insurers also recognize that people have control over their credit-based insurance score and over time, can improve it. After a policy has been in effect for a certain amount of time, companies that use credit information at renewal typically reorder credit information on the customer. If their credit-based insurance score improves, they will receive a better rate.

Topics Carriers Mexico New Mexico