- Your insurance score is a way that most insurers figure you what your risk is as a driver
- The formula used to generate your insurance score is based on your car accidents and car insurance claim record as well as information from your standard credit report
- Your insurance score is not the same as a credit score because your credit score is evaluating your financial responsibility only
- Your insurance score is focused on the likelihood that you will have an accident or need to file a claim under your car insurance policy
- Your total insurance score could be anywhere between 300 and 997
Even though they sound similar, your insurance score and your credit score are actually two different things. Your insurance score helps car insurance companies determine the rate to charge you for car insurance because it evaluates your risk as a driver.
In coming up with your insurance score, car insurance companies are trying to figure out the likelihood that you will eventually file a claim under your policy.
As a general rule of thumb, drivers who end up filing a claim are more expensive to insure. The higher your insurance score, the lower the rate you will be quoted for car insurance.
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What Determines Your Insurance Score
In general, your car insurance score is based on your credit score and your claims history report.
Even if you did not file a claim through your current insurance company, your insurer may be able to find your past claims history while you were insured by other companies through a private database that the major insurance companies subscribe to.
Insurance companies submit claims information for each insured to the databases. The two major databases for claims information about drivers are the Automated Property Loss Underwriting System (A-PLUS) and the Comprehensive Loss Underwriting Exchange (CLUE).
Your credit score is considered in determining your insurance score because it is an indicator of your financial responsibility.
Car insurance companies have found that people with higher credit scores are statistically less likely to end up filing a claim under their car insurance policies, so they pay less for their insurance in general.
Some of the factors that influence your credit score are how much debt you have, your history of paying bills on time, the amount of credit that you have applied for, whether you have ever filed for personal bankruptcy, what types of loans you have taken out, and the ratio of your debt to income.
The General Range for Insurance Scores
There are two major independent companies that generate insurance scores: the Fair Isaac Corporation and ChoicePoint. Both of these rating companies offer a range of scores, and the higher the score, the lower risk driver you are considered to be.
Under the Fair Isaac Corporation, scores can be between 300 and 900, and anything above 700 is typically a decent score. Under the ChoicePoint insurance scoring system, insurance scores are between about 300 and 997, with numbers closer to 997 being better scores.
The benchmark for insurance scores to translate to lower premium rates will differ according to each auto insurance company.
Some will have higher standards for insurance scores than others, which makes it a smart idea to shop around for insurance if you are concerned about a low insurance score.
Ask the insurance company if there are good driver discounts available for insured drivers who have a certain length of time on their driving record without an accident or claim. This could significantly lower your car insurance premium through some car insurance companies.
Ways to Improve Your Insurance Score
Working to improve your insurance score is a great way to lower your car insurance bill. One of the most effective ways to do this is to try to improve your credit score.
If you have debt that you are able to pay down, this is an important step in getting a boost in your credit score. Also, you can try not to take out any new lines of credit for a certain period of time. For any bills that are past due, do your best to try to get them taken care of as quickly as possible.
Another effective way to improve your insurance score is to not have any claims for a certain length of time.
Other than practicing safe driving habits, if you are able to resolve any minor damage to your car or incidents without contacting your insurance company, this can save you money down the line in avoiding a decrease in your insurance score.
The Final Word on Your Auto Insurance Score
Your insurance score is a rating used by car insurance companies to figure out the probability that you will file a claim under your car insurance policy. The major things that affect your car insurance score are your credit score and your claims history.
Even if you filed a claim under another insurance policy, this information could be submitted to a universal private database that is used by all of the major car insurance companies.
To get the lowest rate possible on your car insurance premium, you want to have the highest insurance score you can. Take steps to improve your credit score and avoid filing claims in order to increase your insurance score.
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