A recent analysis by the Consumer Federation of America and the Climate and Community Institute reveals that Illinois homeowners with low credit scores are paying substantially more for insurance than their higher-scoring neighbors—even when living in areas with minimal natural disaster risk.
The study found that a typical Illinois homeowner with a low credit score pays approximately $2,122 more annually—more than double—compared to a homeowner with a high credit score in a similar, low-risk location. This disparity persists despite rising insurance costs statewide, with premiums increasing roughly 50% since 2021, reaching an average of $3,000 annually, the second steepest rise in the nation.
“This report shows how allowing the insurance industry to self-regulate its prices and practices is failing Illinoisans,” said Illinois PIRG director Abe Scarr. “As extreme weather events become the new normal, insurance rates should be based on risks to the home, not on who the homeowner is.”
In some cases, homeowners with low credit scores living in the safest regions pay similar premiums to high-credit-score homeowners facing disaster risks 70 times higher. Even homeowners with medium credit scores (around a 740 FICO) pay nearly $1,000 more than those with high scores.
Advocates are urging Illinois lawmakers to ban the use of credit scores in premium calculations—a policy already adopted by California, Maryland, and Massachusetts—and to increase transparency by requiring insurers to disclose details of their pricing models. Governor J.B. Pritzker has called for empowering the Illinois Department of Insurance to approve or modify excessive rate hikes, a regulatory authority common in most other states.
The report draws on nationwide data from Quadrant Information Services and includes a technical analysis by University of Minnesota sociologist Nick Graetz.
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