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Auto Insurance Score: Here’s What You Need to Know

What Exactly Is an Auto Insurance Score?

Ever needed to purchase vehicle insurance but didn’t know what contributes to the price you will need to pay? Are you familiar with an insurance score and know why is it so important? In this article, we will explore what an auto insurance score is and the various factors that add to it. We will also provide tips on how it can be improved.  

Your auto insurance score is a number that insurance companies use to help predict how likely you are to file a claim. These companies use many factors to determine your premium, and your score is one of them. They have different ways of calculating your score, but the most important factors are usually your driving record and credit history.  

Insurance companies will look at your past driving history to see if you’ve been in any accidents or gotten any traffic tickets. They’ll also check your credit history to see if you have good payment habits. If you have a lot of debt, that can negatively impact your score.  

A good auto insurance score can save you quite a bit of money on your premium, so it’s worth taking the time to understand how it works.  

Different insurance companies have different standards for what is considered a “good” score, but generally speaking, a score of 700 or above is considered excellent. A score of 650-699 is considered good, while anything below 650 is considered fair to poor.

What Exactly Is an Auto Insurance Score?

An auto insurance score is a numerical representation of your risk of filing a future insurance claim, based on your past claims’ history. Insurance companies use car insurance scores to help them determine how much to charge you for coverage. This is the reason why your and your friend’s premium will cost totally different even if you drive the same type of car daily.  

Auto insurance scores are based on information in your credit report. Your credit report is a record of your financial history, including your payment history on bills and loans. Insurance companies have found that people with poor credit are more likely to file an insurance claim than people with good credit. As a result, they use your auto insurance score to help them determine how much of a risk you are. This is how auto insurance and credit score are strongly connected; however, some states did decide to prohibit insurers from using your credit score to determine your rates.   

Nonetheless, even in these states, insurers may still consider other factors that are related to credit, such as your payment history on other types of insurance policies.  

If you’re concerned and wondering how to check your auto insurance score, the solution is quite simple. You can check your credit report to see what information is being used and then enter all the needed numbers in some of the calculators that can be easily found online.  

Once you know your score, you can take the necessary steps in order to improve it. Work on improving your credit by paying all of your bills on time and keeping balances low on your credit cards.  

How Is an Auto Insurance Score Calculated?

Insurance companies look at many factors when they calculate your auto insurance score. Here, we will cover some of the things they look at so you can have a good picture of what goes into your score and how you can work on it by yourself. Auto insurance score factors include:  

  • Your credit history  
  • Your driving record  
  • The type of car you drive  
  • How much you drive  
  • Where you live  

These are the general factors almost all companies use, however, they do have different methods of calculating your final score. So, if you fall into the good range with one company, it doesn’t mean your score will stay in the same category with another company. The same goes if your score is in the bad or poor range.   

This is just one of the reasons why checking your score and premium costs with only one company isn’t enough. Be sure to browse around for a bit and search for the deal that you can benefit the most from.  

Auto Insurance Score vs. Credit Score: What’s the Difference?

While one can influence the other when purchasing the premium, it’s important to understand the difference between an auto insurance score and a credit score. In short, an auto insurance score is a numerical rating that insurance companies use to help predict risk. A credit score is a number that lenders use to help predict risk.  

Auto insurance scores are only partially based on information in your credit report. They look at your payment history but also your driving record and some other factors we already mentioned to help insurers predict whether or not you’re likely to file a claim.  

Credit scores are also based on information in your credit report. But they look at different factors, such as your payment history, outstanding debt, and credit utilization ratio. Credit scores are used by lenders to help them decide whether to give you a loan and what interest rate to charge you.  

The bottom line is that an auto insurance score isn’t the same as a credit score. And while insurers may consider both when making underwriting decisions, they place more emphasis on your auto insurance score than your credit score. This doesn’t mean that you shouldn’t be aware of your credit score, but only that it may be more relevant to you when getting a loan.  

What Is a Good Auto Insurance Score?

Generally, a good auto insurance score is anything above 700. This is on a FICO scale of 250 to 900, so you can see that being in the good range means you’re doing pretty well.  

To get a sense of what goes into your auto insurance score, know that insurers look at things like your credit history and whether you have any accidents or moving violations on your record. They also consider the type of car you drive and how much coverage you want.  

Auto insurance scores are important because they help insurers predict your behavior as a driver. And the more likely you are to file a claim, the higher your rates will be. So, companies can profit a lot if they predict this right.  

How to Check Your Auto Insurance Score

We already talked about the different factors needed to determine this insurance score. 

Fortunately, there are a few ways that you can check your auto insurance score to see where you stand. 

Here are a few tips:  

  • Check your credit report. Your credit score is one of the most important factors in determining your auto insurance score. Make sure to check your credit report regularly to make sure that there are no errors that could be dragging down your score.  
  • Request a quote from an insurance company. Many insurance companies will provide you with a quote based on your auto insurance score. This can give you a good idea of where you stand and what you can expect to pay for coverage. And if you are wondering do auto insurance quotes affect credit scores, the answer is no.  
  • Ask your agent. If you have an insurance agent, they may be able to give you some insight into your auto insurance score. And once you know this number you can work with your agent on how to improve your auto insurance score if it’s not as high as you would like it to be.  

How to Improve Your Auto Insurance Score

There are several things you can do to improve your auto insurance score. First, make sure you have a clean driving record. If you have any accidents or traffic violations, work on resolving them as soon as possible. Secondly, be sure to keep your insurance payments up to date. If you let your policy lapse, it will negatively impact your score.   

Finally, make sure the information on your insurance application is accurate. Incorrect information can lead to a lower score. By following these tips, you can improve your auto insurance score and get the best rates on your premium in the future.  

And the last question you probably have- does auto insurance affect credit score? The answer is that it can if you keep on missing your payments, but if you are just a bit late, nothing will likely happen.  

Bottom Line

In this article, we tried to give you a good explanation of what a car insurance score is and why it is so important. This numerical representation of your likelihood to file a complaint is widely used, and no matter the company you choose to purchase your policy from, you will need to have a good score in order to get a good deal.  

There are a number of factors that go into calculating your auto insurance score. The most important factor is your driving record. Insurance companies will also look at your credit history and other personal information to determine your rate.  

Be sure to speak with an agent or financial advisor if you need any additional help in bettering your score or understanding the whole concept. 

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