CHICAGO (WBBM Newsradio) — Illinois homeowners with low credit scores are paying significantly more for insurance than those with higher scores, even when they live in areas with little risk of natural disasters, according to a new report from the Consumer Federation of America and the Climate and Community Institute.

The analysis, released Tuesday, found a typical Illinois homeowner with a low credit score pays about $2,122 more annually, more than double, compared to a neighbor with a high score even if the home is in a low-risk area.

“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.”

The report comes just days before a $500 million rate increase for State Farm Illinois customers takes effect, a move the insurer says is needed to address frequent severe weather events.

Researchers found that in some cases, a homeowner with a low credit score in one of the safest parts of the country pays the same premium as a high-score homeowner in an area facing 70 times more disaster risk. Illinois premiums have risen 50% since 2021, from roughly $2,000 to $3,000 annually, the second-sharpest increase in the nation. Even residents with medium credit scores, around a 740 FICO, pay an average of $975 more than those with high scores.

Advocates are urging lawmakers to ban the use of credit scores in setting premiums, a policy already in place in California, Maryland and Massachusetts, and to require insurers to publicly disclose more details about their pricing models.

Gov. J.B. Pritzker has also called for giving the Illinois Department of Insurance the authority to reject or modify excessive home and auto insurance rate hikes, a power held by regulators in most other states.

The report used nationwide data from Quadrant Information Services and was released alongside a technical analysis by University of Minnesota sociologist Nick Graetz.