What Is an Insurance Score and How It Impacts Your Policy

An insurance score is a three-digit number that insurance companies use to assess your creditworthiness and determine your premiums. It's based on your credit history and other factors.

Your insurance score can impact your policy in a big way, with higher scores often resulting in lower premiums and more favorable terms. This is because insurance companies view policyholders with good credit as lower-risk.

Insurance companies use credit-based insurance scores, which are different from FICO scores, to make decisions about your policy. This means that your credit history plays a significant role in determining your insurance score.

Your insurance score is determined by two main sources: your credit report and your claims history. The specific factors used from these sources can vary by insurance company, but generally include information from your credit report and claims data.

Insurance companies use your credit report to get a picture of your financial responsibility, but they might not look at the same things as a bank would for a loan. They'll consider factors like your payment history, accounts in collections, and credit card balances.

Your claims history, which can be pulled from shared databases like CLUE or A-PLUS reports, shows how often you've filed insurance claims. This can affect your score, especially if you have a history of filing frequent or costly claims.

Here are some key factors that can impact your insurance score:

These factors are similar to those used in credit scores for lenders and creditors, but insurance companies might weight them differently.

An insurance score is a key component in determining the total premium you pay for health, homeowners, auto, and life insurance policies. Insurance scores range between 200 and 997, with scores of 770 or higher considered favorable.

Scores are not permanent and can be affected by different factors, such as improving your credit score, paying bills on time, and reducing debt. Limiting the number of insurance claims filed over a certain period can also help boost your insurance score.

Here are some key things to know about insurance scores:

Insurance scores are used by insurance companies to assess a potential insured consumer's level of risk. A good insurance score can lead to lower premiums, while a low score can result in higher rates.

A good insurance score is crucial in determining your insurance premiums. A score of 770 or higher is considered favorable, and you'll likely get lower rates.

Insurance scores range between 200 and 997, so it's essential to know what constitutes a good score. A score of 500 or below is considered poor.

If you have a good FICO score, you'll likely have a good insurance score as well. FICO's scale ranges between 300 and 900, with scores above 700 considered good and anything above 800 considered exceptional.

Not all insurance companies have the same standards for determining good scores, however. Some auto insurance companies may offer lower premiums for scores in the 800-range, while others may only require scores in the 700-range.

Here's a breakdown of the scales used by different companies:

Keep in mind that these are general guidelines, and the specific standards may vary depending on the insurance company and type of insurance.

Credit-based insurance scores and credit scores are two distinct measures, despite considering similar underlying information. Credit-based insurance scores predict the likelihood of filing claims that lead to a loss for the insurance company.

The score ranges for credit-based insurance scores can vary greatly, unlike credit scores which typically range from 300 to 850. The LexisNexis Attract score, for example, has a range of 200 to 997.

Insurance companies can't solely rely on credit-based insurance scores to decline applications or set rates. State laws generally prohibit this, although some states don't allow insurance companies to use scores at all.

You can't easily check your credit-based insurance scores, unlike credit reports and scores which are easily accessible. You might need to ask your insurance agent for your credit-based insurance score, but it's not always possible.

Here's a comparison of credit scores and credit-based insurance scores:

Pay your bills on time to improve your insurance score, just like you would improve your overall credit score.

A good debt to credit ratio is also important, meaning you shouldn't use too much of your available credit.

Avoid filing unnecessary claims, as too many claims will hurt your insurance rates.

Consider covering damage out of pocket if it's not too far above your deductible.

Your insurance score isn't recalculated mid-term, but a change in your credit score can affect your rates at renewal.

To improve credit-related factors, pay off your liabilities on or before the due date to avoid letting interest compound month after month.

Decrease your credit utilization by using less credit than the total amount available across all your liabilities.

Diversifying your available credit can also help, but be cautious not to take out too many accounts at once.

Paying off different types of credit sources signals to insurers you are adept at managing different liabilities.

However, paying your bills on time and in full is much more important than credit diversification.

Investigating quotes across different companies can help you find a policy with the best rates for you.

Some insurers, like Say Car Insurance, do disclose insurance scores, but not all do.

A poorer car insurance score will increase your rates, with quotes varying substantially across different insurers.

At State Farm, a good insurance score results in a higher rate compared to all of Geico's rates, including those for poor and worst insurance score tiers.

The difference in annual premiums between an average and poor insurance score at State Farm is nearly $2,000.

Quotes based on insurance scores can be quite disparate, with significant differences in rates from one insurance score tier to the next.