An insurance company handling a car-crash victim’s accident claim violated the senior citizen’s privacy rights by accessing his credit rating for no good reason, the federal Privacy Commissioner has ruled.

The Personal Insurance Company argued it needs such information to help weed out fraudulent claims, but the privacy watchdog said there was little evidence that examining clients’ credit worthiness helps counter insurance cheating.

The decision this month dealt a blow to what appears to be a common industry practice.

In fact, fraud likely has little to do with why insurers seek access to credit scores, charged advocate Rhona DesRoches, who heads the Association of Victims for Accident Insurance Reform.

She suggested that companies want instead to gauge the claimant’s financial status to help determine how little they can get away with paying out.

“This is very worrisome,” DesRoches said. “Just knowing how much debt a person carries might be an indicator of what that breaking point is … If they know a person is in dire financial straits, then they know how far along that person might go before giving in to perhaps a lower settlement than they should.”

In response to the privacy commissioner’s investigation, The Personal has agreed to stop using credit scores to assess auto claims by April 22, the agency said in its decision.

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