I'm a New Jersey resident, and if you're a New Jersey resident, you've noticed that over the past 2 years, many of the insurance companies that sprinted from the state during the 1990's have returned with their arms wide open, ready to accept your money once again. GEICO is back, Progressive is back, and all of the other companies have ramped up their advertising, as laws have been passed in New Jersey to mirror the laws already passed in other states to motivate the insurance companies to come back. There is one law in particular that has been passed in New Jersey that has been legal in other states for quite some time. It's making New Jersey residents, the few that know about it, furious.

If you are a New Jersey resident, you are very likely not aware of this, so this should especially interest all of you Jersey-ites. If you're not a New Jersey resident, you also may not be cognizant of what I'm going to reveal to you, so this should interest you as well.

Here it is: insurance companies in New Jersey are now able to use your credit score to determine the price of your auto and home insurance. The better your credit score, the steeper the discount you will receive. For those of you with credit scores below 600, Ouch!

This infuriates many people, because if they have a perfect driving record with no accidents or violations, but have an adverse credit situation, or a slightly less than desirable credit score, they have to pay more for their insurance, whereas the rich guy who doesn't need the discount pays 50% less or sometimes 300% less than you because he's rich.

What could possibly justify this? Can't insurance companies simply evaluate a person's driving record and the quality of the territory in which they live to determine what the rate should be and leave it at that? Do they have to add insult to injury by saying ?your credit score sucks too,? and triple the price for the insurance?

Well, yes, they have to, if they want to make truckloads of money. Allow me to explain. The insurance companies say that they are justified in using a credit score to determine the price of auto and home insurance because it reflects how responsible the person is, and it enables them to gauge how susceptible that person is to having an accident or burning their house down.

However, this does not justify giving a person with a high credit score a policy that is 200% or sometimes even 600% cheaper (as is the case with certain home insurance companies) than someone whose credit stinks. If insurance companies wanted to jack up the rate by 30% if a person had a credit score below 600, that would be fair. But that's now what's going on. The insurance companies are profiteering, plain and simple.

So, the rich get richer. The people with the most money get the biggest discounts, and the people with the least money pay ridiculous premiums, sometimes 3 or 6 times more than the rich guy, even though they may have no marks against them on their motor vehicle report and have never filed a homeowners insurance claim.

I agree that a person's credit score does tell you something about the person, and it should be legal to use that score for underwriting purposes, but that does not entitle the insurance companies to use it in the manner they are. The insurance companies are making huge profits on those customers with lower credit scores, who are paying through the nose and still never filing a claim or having an accident.

It's simply not fair, but it's perfectly legal. State governments needs to set limits on the increased premium charged to those who don't have a stellar financial record. Certainly, the insurance companies are not going to regulate themselves.