It’s never too late to try to improve your financial position, credit score, or your insurance score. With many people watching their budgets closely these days, lowering your insurance premiums is a great way to save on expenses. So, how do insurance scores affect my premium payment, and what can I do to improve my score? Staples & Associates breaks it down for you. 

What is an Insurance Score and Why Does It Matter? 

An insurance score, or credit-based insurance score, helps insurers predict the likelihood of you filing a claim, and is one of several factors used to determine premiums. 

For example, auto insurance companies might also take into account your location, age, the make and age of your vehicle, and your driving habits. Additional considerations may include payment history, overall debt, duration of credit history, recent requests for new credit, and credit variety.

Unlike credit scores, which gauge loan repayment risk, insurance scores assess claim risk. Checking your insurance score to obtain a quote is a soft inquiry, not a hard credit check.

Why Does the Insurance Score Matter?

The insurance score affects premiums, and underwriting, and indicates financial responsibility, helping insurers assess how likely you are to manage your policy well. 

Insurance companies use insurance scores to evaluate the risk associated with insuring a specific individual. Typically, people with higher insurance scores have lower premiums due to their perceived lower likelihood of filing claims. Conversely, those with lower scores may face higher premiums reflecting higher perceived risk, as they statistically tend to file more claims.

The score also impacts underwriting decisions, including policy approval and coverage terms, such as deductibles and coverage limits. 

How Can I Improve My Insurance Score?

To improve your Credit-Based Insurance Score, start by enhancing your credit score. A better credit profile can lower your insurance premiums. Begin with simple steps like setting up auto-pay for bills, avoiding store credit card applications to limit credit checks, and reducing your debt. A diverse mix of credit types (mortgage, auto loan, credit card, personal loan) is beneficial, but timely payments and reducing debt are key to boosting your score.

Contact Staples & Associates for guidance on the best personal insurance for your unique situation.