Is an Insurance Score the same as a Credit Score?
No it is not. An insurance score uses some of the same elements that make up your credit score but altogether pulls about 20 to 30 pieces of financial information to build an insurance score on you. Some insurers use their own methods to build a score and some rely upon national companies such as Fair Isaac or LexisNexis to develop scores.
Why do they do this?
Generally, underwriters use an insurance score as a predictor of insurance claims or losses and charge premiums accordingly. Insurers vary widely on how much weight they attribute to someone’s insurance score when developing a premium. The bottom line is that statistically, people with a poor insurance score are more likely to file a claim and incur greater losses. Those who have a favorable score tend to be more responsible drivers and homeowners. You should remember that this is not the only criterion that underwriters use to determine your premium. The also consider things like your age, driving experience, how your vehicle is used, claims history, driving history, type of vehicle you are driving, your geographical location and more. Rates for homeowners insurance are figured by taking into account such things as the home’s age, location, construction, presence of alarms or sprinklers and claims history.
Can I Improve my Score?
Yes. Your insurance score can be improved much the same way as your credit score is improved. Pay your bills on time; be sensible about credit card use and keep you debt to asset ratio in line and you will improve your credit and insurance score over time.
Regardless of your insurance score an independent agent like Farm Country Insurance can help you to select the best coverage and company for your particular insurance needs. Trust a professional to help guide you when shopping for insurance.
Thanks to Insurance Deals4U for some of the content of this article.