A higher credit score lowers your car insurance rate, often significantly, at almost every insurance company and in most states. However, getting a quote doesn't affect your credit. A credit-based insurance score allows insurers to quote the fairest and most appropriate rate for each customer. Approximately half of our current customers pay a lower premium depending on their credit rating.
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. Insurers use credit-based insurance ratings for underwriting, assigning consumers to a pool based on risk, and then to qualify when deciding how to adjust the premium up or down. A low insurance score can be expensive, especially for car insurance coverage, which is legally required of car drivers in 49 of the 50 states of the United States. Some states, such as California, Hawaii, Massachusetts, Washington and Michigan, prohibit insurance companies from using credit to determine auto insurance rates.
For example, classic car insurance is specifically designed for the unique needs of those who appreciate classics. A credit-based insurance score doesn't measure your creditworthiness, but rather the risk you run from a car insurance perspective, based on your creditworthiness. The insurance rating predicts the likelihood that you will be involved in an accident or insurance claim in the future and is based on information collected from policyholders with similar credit characteristics who have had claims with us before. Insurance qualification is a key component in determining the total premium a person pays for health, home, auto and life insurance policies.
Auto insurers check your credit with a gentle method, which doesn't provide a complete credit history and doesn't affect your score. A consumer may also try to limit the number of insurance claims filed during a given period to increase their insurance rating. Even if they know about the existence of credit-based insurance scores, it's not intuitive for consumers to understand how credit-based insurance scores work or why they work. Insurance rate data comes from insurance company files from public sources collected by Quadrant Information Services.
An insurance score, also known as an insurance credit score, is a score calculated and used by insurance companies that represents the likelihood that a person will file an insurance claim while covered.