The cases directly decided by the court involve The Hartford and GEICO. But the decision also reinstated complaints against Farmers Insurance Co., State Farm and Safeco, according to Steve Larson, of Stoll Stoll Berne Lokting & Schlacter PC of Portland, Ore., one of the lawyers in the case.

"We were pleased with the court's decision," Mr. Larson said. "We believe it is correct and we think it is important for consumers."

Julie Gackenbach, assistant vice president, government relations, for the Property Casualty Insurers Association of America (PCI), said the decision "is exceedingly broad in scope and could have negative implications for insurers and their policyholders across the nation."

Ms. Gackenbach added, "A reading of the 9th Circuit decision could result in the issuance of an adverse action notice in the vast majority of insurance transactions, which was clearly not in the spirit of the FCRA."

Robert Detlefsen, public policy director for the National Association of Mutual Insurance Companies added that because "adverse action notifications will have to be sent to many more people" that the cost of the burden "will fall disproportionately on small and medium sized companies.

"Even though credit scoring has proven to be a valuable underwriting tool, some smaller insurance companies may reevaluate their use of credit scores given the increased cost," Mr. Detlefsen said.

But Robert Hunter, director of insurance for the Consumer Federation of America, called it "a great decision."

He added that, "We're very pleased. It is about time that some low income and minority people are protected. We are very grateful."

A spokesman for The Hartford said that because the decision has just been issued, "we must review it carefully before we would have any comment."

GEICO's legal department responded by saying that, "We believe that our practices are proper and we intend to appeal this decision."

Robert D. Allen, a lawyer for GEICO with Baker and McKenzie in Dallas, added, "We're mulling over all of our options."

These options include seeking review by the full 9th Circuit Court or seeking review by the U.S. Supreme Court. "All legal and practical avenues will be explored," Mr. Allen said.

Mr. Larson said that when the cases return to federal district court in Portland for further proceedings, that he will seek class action status for all of them.

He said that now that the cases have been reinstated, the law authorizes consumers to seek damages of between $100 and $1,000 per person, plus attorney's fees, if a "willful" violation of nondisclosure has been determined.

The insurance companies committed "willful" violations of the disclosure provision by their "exceedingly narrow interpretations of their obligations." The Court also said that the insurers' interpretation of the law "was not reasonable," adding that, "Relying on reasoning that was objectively unmeritorious; these companies sought to benefit from the privilege of using consumers' private credit information and yet be free of the attendant obligations."

The case, Reynolds v. Hartford Financial Services, Inc., No. 03-35695, was noted by the three-judge panel as one of "first impression," in other words the first time a federal Appeals Court has interpreted the definition of "adverse action" in the law.

The extent to which insurers can use credit reports in determining rates for personal lines insurance products has been debated on both the national level and within each state.

The National Association of Insurance Commissioners has also dealt with the issue a number of times. In this case, a federal law, the Fair Credit Reporting Act enacted in the 1970s, was being interpreted by the Court.

FCRA was last amended in 2003 by Congress when a provision was added allowing consumers to ask for a free copy of the credit report on which the less than optimum rate for auto and homeowners' insurance was based.

The essence of the decision was voiced by the Appeals Court panel when it said, "Hartford Fire's contention that FCRA does not apply to the rate charged in initial insurance policies would seriously undermine Congress's clear purpose."

The panel explained that, "The use of credit reports to help determine the rates to be charged for initial insurance policies is common. Moreover, it is these policies that the economically unsophisticated are most likely to purchase. Congress did not create such strong protections for consumers only to render them inapplicable in so critical a circumstance.

"Furthermore, as FCRA is a consumer protection statute, we must construe it so as to further its objectives," the panel added.

The majority opinion of the three-judge panel was written by Judge Stephen Reinhardt. Judge Jay Bybee dissented on the issue of whether the insurers "willfully" violated FCRA by failing to provide the notices in the cases brought before the court, saying the lower court should determine based on the facts whether The Hartford and GEICO's actions constituted willful violation, not on the basis of "lawyers' arguments on appeal."