What is an insurance score — and how does is affect your rates? (2024)

FAQs

What is an insurance score — and how does is affect your rates? ›

An insurance score is a score calculated from information on your credit report. Credit information is very predictive of future accidents or insurance claims, which is why Progressive, and most insurers, uses this information to help develop more accurate rates.

An insurance score, also known as an insurance credit score, is a rating computed and used by insurance companies that represents the probability of an individual filing an insurance claim while under coverage. The score is based on the individual's credit rating and will affect the premiums they pay for the coverage.

According to the Insurance Information Institute, insurance scores are confidential ratings calculated by insurance companies primarily by using data from your credit history.

According to the company, a score of 770 or better is considered good and will get you favorable rates. A score of 500 or below is considered poor and could result in higher premiums or being turned down for coverage.

In most states, car insurance companies are allowed to use credit scores during the underwriting process to determine a consumer's eligibility for coverage and to set policy rates. However, only four states—California, Hawaii, Maryland and Massachusetts—prohibit the use of any credit information.

B++, B+ Good Assigned to companies that have, in our opinion, a good ability to meet their ongoing insurance obligations. B, B- Fair Assigned to companies that have, in our opinion, a fair ability to meet their ongoing insurance obliga- tions.

AM Best. The most well-known insurance specific rating company, the scores provided by AM Best are often considered the yardstick for financial strength in the industry. The highest rating offered is A++ (Superior) while the lowest is a D (Poor).

In general, when you make a claim against your insurance policy above a specific amount due to an incident that is primarily your fault, an insurer will increase your premium by a certain percentage.

Someone's score in a game or test is a number, for example, a number of points or runs, which shows what they have achieved or what level they have reached. The U.S. Open golf tournament was won by Ben Hogan, with a score of 287. He won this year's title with a score of 9.687.

Why do I have high insurance rates? ›

Why Is My Car Insurance So High? Your car insurance may be expensive because of your driving history, location, vehicle or credit history. Recent insurance claims and violations can increase your rates for three to five years. On the other hand, it's possible you also just have a more expensive car insurance company.

Does Progressive check credit history when my policy renews? In states where it is allowed or required by law, we periodically review policies, including credit history.

Some auto insurance companies use credit-based insurance scores to help them decide whether to offer someone an insurance policy and the premiums for the policy. These scores are based on one of your consumer credit reports. However, they're not the same as the credit scores that lenders use.

According to our rate estimates, the best companies with cheap auto insurance for those with lower credit scores include USAA, Geico, Nationwide and Progressive.

Life insurance companies ask about other insurance policies to assess the overall risk they are undertaking when insuring an individual. Knowing about other policies helps insurers determine the policyholder's financial exposure and ensure that the coverage amount is appropriate.

California

Insurance companies in California don't use credit-based scores or your credit history for underwriting or rating auto policies, or setting rates for homeowners insurance. As a result, your credit won't impact your ability to get or renew a policy, or how much you pay in premiums.

Making all of your debt payments on time, keeping your credit utilization down, and having numerous accounts in good standing can help your auto insurance scores (and your credit scores, too!). You may also want to keep your oldest credit accounts open to show a long-established track record.

Why do insurance companies use credit information? Some insurance companies have shown that information in a credit report can predict which consumers are likely to file insurance claims. They believe that consumers who are more likely to file claims should pay more for their insurance.

Graded life insurance offers a scaled death benefit that increases to its full amount over 3-5 years, targeting individuals with health issues or lifestyle risks ineligible for traditional policies. Reviewed by W&S Financial Review Board Updated May 17, 2024.

The insurance risk class allows insurance companies to determine the amount of coverage needed, as well as how much that coverage should cost. Risk classifications are most commonly applied when underwriting life insurance policies.