Do you have to agree to a credit check when required by an auto insurer in a motorcycle theft claim?

My boyfriend’s motorcycle was stolen and he had insurance coverage on it. He has submitted a claim but the insurance agent is requesting a credit check. Is this lawful?

Asked on March 19, 2019 under Insurance Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

It is lawful. Insurers may investigate claims to see if they are legitimate--for example, that someone did not sell his motorcycle under the table but then claim it stolen, or pay someone to steal it so he could make an insurance claim. Theft claims are often suspect if the vehicle is not recovered. One thing the insurers look for is evidence that the insured was in financial distress, since if he was, that increases the likelihood that the theft was not legitimate, but was a way to get insurance money.
If your boyfriend does not cooperate, the insurer likely will not pay. He could in theory then sue for "breach of contract" (an insurance policy is a contract) on the basis they are not honoring their contractual obligation; if he can prove in court they should pay, they will have to. But in the lawsuit, if they can convincince the judge that the credit report may be relevant, they'll be able to get it anyway (and/or banking information, credit card information, and other financial information); he therefore may wish to cooperate now, instead of forcing litigation and likely having to allow it anyway.


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