An insurance score is a three-digit number that insurance companies use to predict the likelihood that a prospective future customer will file a claim. Insurers take this score into account when determining if they will offer you an insurance policy and how much the insurance premiums will pay. Like your credit score, a credit-based insurance score is a three-digit number that is calculated using information from your credit report. It provides an assessment of your insurance risk at a given time and helps American Family forecast your future performance as a customer.
An insurance score is a number based on your credit history that is used to predict your likelihood of filing an insurance claim that will cost the insurer money. Auto insurance scores, also called credit-based insurance scores, can be used to set auto insurance premiums everywhere except Massachusetts, Hawaii and California. People with lower insurance scores are considered to pose a greater risk to the insurance company and are therefore charged higher rates. According to FICO, approximately 95% of personal auto insurance companies use auto insurance ratings when calculating premiums.
Car insurance companies have found that people who are less responsible with credit also tend to have more accidents. However, it's important to remember that every auto insurance rating provider and auto insurance company has their own definition of “good score.” The credit rating company FICO estimates that 95% of auto insurance companies use insurance ratings as a factor in determining prices. The NAIC provides experience, data and analysis for insurance commissioners to effectively regulate the insurance industry and protect consumers. Car insurance companies mainly take into account aspects such as your age, driving history, and the make and model of your car.
Insurance qualification is a key component in determining the total premium a person pays for health, home, auto and life insurance policies. While most health, home and life insurance companies use a similar process to calculate consumer insurance ratings, auto insurance companies have different standards for what they consider to be a good rating. You can contact your state's insurance department to request updated information on state auto insurance laws and non-credit check auto insurance companies. However, for most Americans, having bad credit or no credit can cost you money when it comes to car insurance premiums.
For example, people without credit pay an average of 67% more on car insurance than people with excellent credit. Getting insurance quotes doesn't affect your credit rating, so you can compare as many car insurance coverages as you want. You may be able to request your insurance rating from the individual insurance companies you are considering. Finally, the fact that credit ratings and insurance ratings are based on similar information means that improving the credit rating can also result in cheaper car insurance premiums.