A federal appeals court is backing off from some of the language in a recent decision requiring insurers to notify a customer in writing that they weren't being offered the best rate because of a low credit score–or be potentially liable for damages.

Instead, in its third opinion in the case, handed down Jan. 25, a panel of the 9th U.S. Circuit Court of Appeals in San Francisco said the lower court hearing the case should decide based on testimony already submitted whether the insurer's action, in failing to disclose the adverse use of credit history, constituted a "willful and unreasonable act."

If so, that could make the insurance companies liable for damages if they failed to notify the customer that the decision was based on a credit report.

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