# Title 26.1 — Insurance

## Chapter 26.1-25.1 — Personal Insurance Credit Information

### § 26.1-25.1-01. Scope.

This chapter applies to personal insurance and does not apply to commercial insurance.
### § 26.1-25.1-02. Definitions.

As used in this chapter, unless the context otherwise requires:
1. "Adverse action" means a denial or cancellation of, an increase in any charge for, or a
reduction or other adverse or unfavorable change in the terms of coverage or amount
of, any insurance, existing or applied for, in connection with the underwriting of
personal insurance.
2. "Affiliate" means any company that controls, is controlled by, or is under common
control with another company.
3. "Applicant" means an individual who has applied to be covered by a personal
insurance policy with an insurer.
4. "Consumer" means an insured whose credit information is used or whose insurance
score is calculated in the underwriting or rating of a personal insurance policy or an
applicant for such a policy.
5. "Consumer reporting agency" means any person that for monetary fees, dues, or on a
cooperative nonprofit basis, regularly engages in whole or in part in the practice of
assembling or evaluating consumer credit information or other information on
consumers for the purpose of furnishing consumer reports to third parties.
6. "Credit information" means any credit-related information derived from a credit report,
found on a credit report itself, or provided on an application for personal insurance.
The term does not include information that is not credit-related, regardless of whether
the information is contained in a credit report or in an application or is used to calculate
an insurance score.
7. "Credit report" means any written, oral, or other communication of information by a
consumer reporting agency bearing on a consumer's creditworthiness, credit standing,
or credit capacity which is used or expected to be used or collected in whole or in part
for the purpose of serving as a factor to determine personal insurance premiums,
eligibility for coverage, or tier placement.
8. "Insurance score" means a number or rating that is derived from an algorithm, a
computer application, a model, or other process that is based in whole or in part on
credit information for the purposes of predicting the future insurance loss exposure of
an individual applicant or insured.
9. "Personal insurance" means private passenger automobile, homeowners, motorcycle,
mobile homeowners, and noncommercial dwelling fire insurance policies. Such
policies must be individually underwritten for personal, family, or household use. No
other type of insurance is included as personal insurance for the purpose of this
chapter.
### § 26.1-25.1-03. Use of credit information.

An insurer authorized to do business in this state which uses credit information to
underwrite or rate risks may not:
1. Use an insurance score that is calculated using income, gender, address, zip code,
ethnic group, religion, marital status, or nationality of the consumer as a factor.
2. Deny, cancel, or nonrenew a policy of personal insurance solely on the basis of credit
information, without consideration of any other applicable underwriting factor
independent of credit information and not expressly prohibited by this section.
3. Take an adverse action against a consumer solely because the consumer does not
have a credit card account without consideration of any other applicable factor
independent of credit information.

4. Consider an absence of credit information or an inability to calculate an insurance
score in underwriting or rating personal insurance unless the insurer does one of the
following:
a. Treats the consumer as otherwise approved by the insurance commissioner if the
insurer presents information that such an absence or inability relates to the risk
for the insurer.
b. Treats the consumer as if the applicant or insured had neutral credit information,
as defined by the insurer.
c. Excludes the use of credit information as a factor and use only other underwriting
criteria.
5. Take an adverse action against a consumer based on credit information, unless an
insurer obtains and uses a credit report issued or an insurance score calculated within
one hundred twenty days from the date the policy is first written or renewal is issued.
6. Use credit information unless not later than every thirty-six months following the last
time that the insurer obtained current credit information for the insured, the insurer
recalculates the insurance score, or obtains an updated credit report. Notwithstanding
this section:
a. At annual renewal, upon the request of a consumer or the consumer's agent, the
insurer shall reunderwrite and rerate the policy based upon a current credit report
or insurance score. An insurer need not recalculate the insurance score or obtain
the updated credit report of a consumer more frequently than once in a
twelve-month period.
b. The insurer may obtain current credit information upon any renewal before the
thirty-six months if consistent with the insurer's underwriting guidelines.
c. An insurer need not obtain current credit information for an insured, despite the
requirements of subdivision a, if one of the following applies:
(1) The insurer is treating the consumer as otherwise approved by the
commissioner.
(2) The insured is in the most favorably priced tier of the insurer, within a group
of affiliated insurers. However, the insurer may order such report if
consistent with the insurer's underwriting guidelines.
(3) Credit was not used for underwriting or rating such insured when the policy
was initially written. However, the insurer may use credit for underwriting or
rating such insured upon renewal if consistent with the insurer's underwriting
guidelines.
(4) The insurer re-evaluates the insured beginning no later than thirty-six
months after inception and thereafter based upon other underwriting or
rating factors, excluding credit information.
7. Use the following as a negative factor in any insurance scoring methodology or in
reviewing credit information for the purpose of underwriting or rating a policy of
personal insurance:
a. Credit inquiries not initiated by the consumer or inquiries requested by the
consumer for the consumer's own credit information.
b. Inquiries relating to insurance coverage if so identified on a consumer's credit
report.
c. Collection accounts with a medical industry code if so identified on the
consumer's credit report.
d. Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer's credit report as being from the home mortgage industry and made
within thirty days of one another, unless only one inquiry is considered.
e. Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer's credit report as being from the automobile lending industry and made
within thirty days of one another, unless only one inquiry is considered.

### § 26.1-25.1-04. Dispute resolution and error correction.

If it is determined through the dispute resolution process set forth in the federal Fair Credit
Reporting Act [Pub. L. 90-321; 15 U.S.C. 1681i(a)(5)] that the credit information of a current
insured was incorrect or incomplete and if the insurer receives notice of such determination from
either the consumer reporting agency or from the insured, the insurer shall reunderwrite and
rerate the consumer within thirty days of receiving the notice. After reunderwriting or rerating the
insured, the insurer shall make any adjustments necessary, consistent with the insurer's
underwriting and rating guidelines. If an insurer determines that the insured has overpaid
premium, the insurer shall refund to the insured the amount of overpayment calculated back to
the shorter of either the last twelve months of coverage or the actual policy period.
### § 26.1-25.1-05. Initial notification.

1. If an insurer writing personal insurance uses credit information in underwriting or rating
a consumer, the insurer or the insurer's agent shall disclose, either on the insurance
application or at the time the insurance application is taken, that the insurer or the
insurer's agent may obtain credit information in connection with such application. Such
disclosure must be either written or provided to an applicant in the same medium as
the application for insurance. The insurer or the insurer's agent need not provide the
disclosure statement required under this section to any insured on a renewal policy if
such consumer has previously been provided a disclosure statement.
2. Use of the following example disclosure statement constitutes compliance with this
section: "In connection with this application for insurance, we may review your credit
report or obtain or use a credit-based insurance score based on the information
contained in that credit report. We may use a third party in connection with the
development of your insurance score."
### § 26.1-25.1-06. Adverse action notification.

If an insurer takes an adverse action based upon credit information, the insurer must meet
the notice requirements of this section. The insurer shall:
1. Provide notification to the consumer that an adverse action has been taken, in
accordance with the requirements of the federal Fair Credit Reporting Act [Pub. L.
90-321; 15 U.S.C. 1681m(a)]; and
2. Provide notification to the consumer explaining the reason for the adverse action. The
reasons must be provided in sufficiently clear and specific language so that a person
can identify the basis for the insurer's decision to take an adverse action. The
notification must include a description of up to four factors that were the primary
influences of the adverse action. The use of generalized terms such as "poor credit
history", "poor credit rating", or "poor insurance score" does not meet the explanation
requirements of this subsection. Standardized credit explanations provided by
consumer reporting agencies or other third-party vendors are deemed to comply with
this section.
### § 26.1-25.1-07. Filing.

1. An insurer that uses insurance scores to underwrite or rate risks shall file the insurer's
scoring models or other scoring processes with the insurance department. A third party
may file scoring models on behalf of an insurer. A filing that includes insurance scoring
must include loss experience justifying the use of credit information.
2. Any scoring models, scoring processes, and information related to scoring models or
processes filed by or on behalf of an insurer pursuant to subsection 1 is considered a
trade secret.
### § 26.1-25.1-08. Indemnification.

An insurer shall indemnify, defend, and hold agents harmless from and against all liability,
fees, and costs arising out of or relating to the actions, errors, or omissions of a producer who
obtains or uses credit information or insurance scores for an insurer, provided the producer

follows the instructions of or procedures established by the insurer and complies with any
applicable law or rule. This section does not provide a consumer or other insured with a cause
of action that does not exist in the absence of this section.
### § 26.1-25.1-09. Sale of policy term information by consumer reporting agency.

1. A consumer reporting agency may not provide or sell data or lists that include any
information that in whole or in part was submitted in conjunction with an insurance
inquiry about a consumer's credit information or a request for a credit report or
insurance score. Such information includes the expiration dates of an insurance policy
or any other information that may identify time periods during which a consumer's
insurance may expire and the terms and conditions of the consumer's insurance
coverage.
2. Subsection 1 does not apply to data or lists the consumer reporting agency supplies to
the insurance producer from whom information was received, the insurer on whose
behalf such producer acted, or such insurer's affiliates or holding companies.
3. This section does not restrict any insurer from being able to obtain a claims history
report or a motor vehicle report.
### § 26.1-25.1-10. Severability.

If any provision of this chapter is declared invalid due to an interpretation of or a future
change in the federal Fair Credit Reporting Act [Pub. L. 90-321; 15 U.S.C. 1681 et seq.], the
remaining provisions of this chapter are not affected and remain in effect.
### § 26.1-25.1-11. Application.

This chapter applies to personal insurance policies either written to be effective or renewed
after April 30, 2004.
