Adverse action notices: what an insurer must tell you about a rate

When an insurer denies you coverage, cancels you, or charges you more, and a consumer report played any part in the decision, the federal Fair Credit Reporting Act (FCRA) requires it to tell you so. The notice must name the reporting agency that supplied the report, say that the agency did not make the decision and cannot explain it, and tell you that you can get a free copy of the report within 60 days and dispute anything wrong in it. Federal law does not require the insurer to list its reasons in detail; some states add that requirement, and many do not.

That gap is where most confusion starts. A notice that says "information in a consumer report affected your premium" is often all the federal law demands. What you do next, which report to pull, who to dispute with, and whether the insurer must re-rate you once the error is fixed, depends on the report involved and on your state.

What counts as an adverse action

The FCRA defines "adverse action" for insurance in 15 U.S.C. 1681a(k). It includes a denial or cancellation of insurance, an increase in any charge for it, and a reduction or other adverse change in the terms or amount of coverage, when the action is taken in connection with underwriting. underwriting is the insurer's decision about whether to cover you and on what terms, so the definition reaches new applications, renewals and mid-term changes.

The duty to send a notice attaches under 15 U.S.C. 1681m(a) when the action is "based in whole or in part" on information in a consumer report. The Federal Trade Commission's business guidance for insurers puts it plainly: the notice is required even when the report played only a small part in the decision. The same guidance notes that a notice does not have to be in writing, although many insurers send one and keep copies for two years to show they complied.

The "neutral score" rule for new customers

New applicants face a wrinkle. In Safeco Insurance Co. of America v. Burr (2007), the U.S. Supreme Court read the phrase "increase in any charge" to cover the initial rate offered to a new customer, but it measured that increase against the rate the person would have received if the insurer had not considered the credit report, not against the best possible rate. The opinion accepted that GEICO owed no notice to an applicant whose company and tier placement would have been the same with a neutral score. The Court acknowledged the cost of that choice: the neutral-score baseline leaves some first-time applicants without a notice that might have led them to a credit report error.

For an existing policyholder the baseline is different. After the first dealing, the Court said, the baseline for an "increase" is the previous rate or charge. So if your renewal premium rises because an updated report changed your score or added a claim, the notice duty applies to that increase.

The practical lesson: if you are a new customer quoted a worse tier than you expected, the lack of a notice does not prove your reports are clean. Ask the agent whether a credit-based score, a claims report or a driving record drove the placement, then check them yourself.

What the federal notice must contain

Section 1681m(a) lists the required elements. Here is how they translate to what you should look for on the page:

Under 15 U.S.C. 1681j(b), the agency must give you the disclosure free if you ask within 60 days of receiving the adverse action notice.

One caution on scores. The FCRA's score-disclosure provision defines a "credit score" as a value used by a person who makes or arranges a loan to predict credit behavior. A credit-based insurance score predicts insurance losses, not loan repayment, so you should not assume the notice will carry a number. Whether an insurer discloses its insurance score, and how much of the reasoning it gives, is a question of state law and company practice. Ask for it in writing.

Three reports, three different paths

An insurer's price can be pushed up by at least three kinds of report. They are held by different organizations, and the dispute route differs.

The NAIC, in a July 2019 government affairs brief, described credit-based insurance scores as using elements of credit history to predict the likelihood of a loss, and noted that typically states will not allow them to be the sole basis for raising a renewal rate or for denying, canceling or not renewing a policy. The same brief said that many states require insurers to notify applicants or policyholders of adverse credit-related decisions, and that Hawaii, Massachusetts and California had prohibited credit history in auto underwriting and rating. If that is still true where you live, a credit report should not be behind your auto price at all; confirm with your regulator, because the brief is from 2019.

For claims history, the Consumer Financial Protection Bureau's page on LexisNexis C.L.U.E. says the service collects up to seven years of auto insurance claims and provides one free report every 12 months on request, and that you can dispute errors with both the reporting company and the company that supplied the data. The Washington insurance commissioner's office adds that a CLUE entry shows the date and type of loss and the amount the company paid, and that you can attach an explanation that will appear on future reports. See Your CLUE report and motor vehicle record explained for how to read yours and How a claim reaches your CLUE report and your renewal price for how an entry reaches your price.

Driving records are different because they are usually public records of convictions kept by the state. Many states also have their own surcharge systems built on them. North Carolina is a clear example, and it is worth a short detour.

A state example: what North Carolina adds

North Carolina's statutes show how far a state can go beyond the federal floor, which is why North Carolina makes a useful case study. Two provisions matter.

Credit. N.C. Gen. Stat. 58-36-90 bars insurers from using credit scoring as the sole basis for terminating an existing policy, or for subjecting a policy to the "consent to rate" procedure, without considering other risk factors. If a credit report is used with other criteria to take an adverse action, the insurer must give written notice in a form the Commissioner approves, in easily understandable language. That notice must include:

1. The specific reason for the adverse action and, if it was based on a credit score, a description of the factors that were the primary influence on the score.
2. The name, address and toll-free phone number of the credit bureau.
3. The fact that you can get a free copy of your credit report from that bureau.
4. The fact that you can challenge the information in it.

The statute then adds a remedy. If the federal dispute process establishes that your credit information was incorrect or incomplete, and the insurer is told, it must re-underwrite or re-rate you within 30 days. If you overpaid, it must refund the overpayment, calculated back to the shorter of the last 12 months of coverage or the actual policy period. Insurers that use credit scores must also file their scoring models with the Department of Insurance, and may ask that those filings be treated as trade secrets.

Driving record. For the state's Safe Driver Incentive Plan, the same chapter requires that when a policy loses its safe driver discount or is surcharged for points, the insurer mail a notice before or with the bill for added premium. The notice must state the basis for the surcharge, and say that on written request the insurer will mail the amount of the increase attributable to it. The North Carolina Department of Insurance publishes the points schedule, so you can check the insurer's math against the public table.

Nevada offers another model. Its statute, NRS 686A.710, requires reasons in "sufficiently clear and specific language," limits the notice to not more than four factors that were the primary influences, and says generalized terms such as "poor credit history" or "poor insurance score" do not meet the requirement. California takes a related line for algorithms: its Department of Insurance's Bulletin 2022-5 states that when insurers use complex algorithms in a declination, limitation, premium increase or other adverse action, the specific reasons must be provided.

Those are examples, not a national rule. Your state may require less or more, so check with your state department of insurance; what your state insurance department does explains what each office does.

What to do when the notice arrives

1. Read it for the agency's name and the date. The 60-day clock for the free report starts when you receive the notice, so write the date on it.
2. Request the report from that agency. Use the contact details in the notice. For claims history, use LexisNexis; for credit, the bureau named.
3. Compare it to what you know. Look for claims that were not yours, a vehicle you never owned, a claim logged twice, a closed-without-payment claim shown as paid, or accounts that are not yours.
4. Dispute with the agency and the source. The Federal Trade Commission's guide to disputing errors says to dispute with the bureau and also with the business that supplied the information, with a separate letter to each, and to include copies, not originals, of supporting documents.
5. Watch the 30 days. Under 15 U.S.C. 1681i, the agency generally has 30 days from receiving your dispute to complete a reasonable reinvestigation, extended by up to 15 days if you send relevant information during that period. Items that are found inaccurate or cannot be verified must be deleted or modified.
6. Send the correction to the insurer and ask for a re-rate. Do not assume the agency's fix reaches your policy. Send the corrected report or the agency's letter to the insurer and ask in writing for a re-rate and a refund of any overcharge. Some states require this; many do not, but insurers often agree.
7. Escalate if the insurer will not respond. See the complaint routes below.

A worked example with invented numbers

Say your six-month premium rose from $1,420 to $1,610 at renewal. The notice names a reporting agency. You request the report and find a $4,200 comprehensive claim from a hailstorm that your insurer paid in full but that is listed against a vehicle you sold before the storm. That claim was not yours.

You dispute it with the agency and the insurer that reported it. Thirty days later, the agency removes the entry. You send the corrected report to your current insurer and ask for a re-rate. In a state with a provision like North Carolina's, the insurer must re-rate you within 30 days, and if the overcharge was in place for the whole term, the $190 difference per term (that is, $1,610 minus $1,420) is refunded. In a state without such a rule, you are relying on the insurer's willingness, and the next renewal may be the first time the correct price appears. Either way, you now hold proof you can use if you shop for new coverage, and the renewal rate increase checker can tell you whether the corrected price is reasonable. These numbers are hypothetical, not market data.

Where to complain

• Your state insurance department. It regulates the insurer's conduct and handles complaints about notices, rating and re-rating. Our guide how to file a complaint against a car insurance company explains what to include.
• The Consumer Financial Protection Bureau. The CFPB accepts complaints about credit and consumer reports, but its complaint page says you are required by law to first dispute the information directly with the credit or consumer reporting agency. That page was last modified October 5, 2026, so check it for current intake rules.
• The Federal Trade Commission. Its dispute guide points to ReportFraud.ftc.gov for reporting bad business practices. A report there is not a substitute for disputing the item itself with the agency and the source.
• A licensed attorney. The FCRA gives consumers a private right to sue. In Safeco, the Supreme Court held that a "willful" violation, the kind that can bring statutory and punitive damages under section 1681n, includes reckless disregard of the notice duty, although it found neither insurer reckless on those facts. Whether you have a viable claim depends on your facts; an attorney is the place for that.

Common questions

Can an insurer raise my rate without telling me why?

It can raise your rate and, under federal law alone, give only the generic notice described above. It must say a consumer report was involved and where to get it. Whether it must name specific reasons depends on your state, as the North Carolina and Nevada examples show. Ask in writing which report and which items drove the change.

Does a notice mean the report is wrong?

No. Most notices go out because a correct report affected the price. A notice is a prompt to check, not evidence of error. Get the report and verify it before disputing.

Is a claim I did not file or a claim where I was not at fault still on my record?

It can be. A CLUE report lists claims, not blame. A not-at-fault claim may appear, and whether it affects your price depends on the insurer's rules and your state's. North Carolina's department says an insurer cannot charge insurance points for an accident that was not your fault, but that is a state rule about its points system, not a general law. See How a claim reaches your CLUE report and your renewal price.

What if the insurer used a score from a company I never heard of?

The notice must identify the reporting agency that furnished the report, which is the company that holds the underlying data. A scoring vendor may have built the model on top of it. Ask the insurer in writing to name both the data source and any scoring company, then request the report from the data source named in the notice; that is the file you can dispute.

Will a dispute lower my rate by itself?

No. A dispute corrects the report. A lower price follows only if the insurer re-rates you, which is required in some states and optional in others. Pair the dispute with a written re-rate request. If the insurer refuses, get fresh quotes: a corrected report helps every insurer that pulls it.

Key takeaways

• Federal law requires an adverse action notice whenever a consumer report contributed even in part to a denial, cancellation or price increase, but the notice need not give detailed reasons.
• The notice names the reporting agency and gives you 60 days to request a free copy and the right to dispute; state laws such as North Carolina's and Nevada's add specific reasons and, in North Carolina, a 30-day re-rate with refund.
• Credit, CLUE and driving-record reports come from different sources; dispute with the agency and the company that supplied the item.
• Correcting a report does not automatically lower your price, so send the fix to the insurer and ask for a written re-rate.
• Complaints go to your state insurance department, and to the CFPB after you dispute directly; a licensed attorney can advise on legal claims.