What’s an auto insurance score?

When applying for car insurance, understanding the factors insurance companies consider when determining your monthly rates is important.

Most major auto insurers use an evaluation method similar to that used by credit card companies and other lenders to determine the risk level associated with a particular driver before insuring them.

By looking at your auto insurance score, insurance companies can understand your driving history and predict how likely it is that you’ll file a car insurance claim. While drivers with higher auto insurance scores are typically offered lower rates on car insurance, insurers see drivers with lower scores as riskier to insure, so they pay higher rates.

This article will explore an auto insurance score and how it can impact you as a driver, including the rates you’ll pay for coverage and how you can boost your insurance score to achieve lower rates.

What’s an insurance score?

An auto insurance score is the rating insurance companies use to predict how likely you’ll file an insurance claim. Your insurance score is one of several factors molding the rate you’ll pay to insure your vehicle.

A higher car insurance score indicates to insurers that a driver is less likely to get into an accident or file an insurance claim in the future, something insurance companies often reward with lower rates. On the other hand, companies see drivers with low auto insurance scores as high risk.

A low insurance score can result in higher rates or getting denied insurance coverage altogether. Find the cheapest auto insurance companies for high-risk drivers. 

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How Credit Scores and Insurance Scores Differ

Although auto insurance companies often use credit scores to evaluate drivers’ risk levels, a credit score isn’t the same as an insurance score.

An auto insurance score assesses how likely a driver is to file an insurance claim for damages related to an accident. Auto insurance companies use it to determine the level of risk associated with insuring you, which can impact the rates an insurer offers.

On the other hand, a credit score assesses how likely a consumer is to make timely payments or default on debts. Creditors and lenders use credit scores to provide credit lines ranging from auto loans to personal credit cards. 

While traditional credit scores can impact your auto insurance score, the two ratings are different and get calculated separately based on their unique criteria. Find out why auto insurance companies use credit scores.

How do insurance scores affect insurance rates?

Many factors affect car insurance rates, including age, location, driving, accident history, coverage limits, and more. Insurance scores also play an important role in calculating the cost of insuring your vehicle.

Other Factors That Can Impact Car Insurance Rates

When it comes to determining your insurance rates and insurance score, multiple factors play a role, including:

• Age. A driver’s age can affect your car insurance rates. Typically, younger drivers pay higher rates to insure their vehicles than older, more experienced drivers.
• Marital status. Insurance companies often view married couples as less risky to insure, which can sometimes result in higher rates for single drivers.
• Driving history. From speeding tickets to DUIs and other citations that could remain on your record for years, maintaining a clean driving record is important to keep your rates low.
• Vehicle’s location. Location plays an important role in determining rates, particularly if you live or park your vehicle in a ZIP code considered high risk by insurance companies.
• Vehicle type. Insurers perceive different types of vehicles as higher or lower risk. For example, a flashy sports car might be more costly to insure than a minivan or sedan.
• Homeownership. Insurance companies often view homeowners as lower risk than renters, and your rates can reflect this perception.

While your insurance score’s impact varies by insurer, the table below can offer insight into the average car insurance rates for U.S. drivers.

Full Coverage Auto Insurance Rates From Top Providers

Since insurance scores and rates vary by insurer, shopping around for quotes is the best way to determine which insurance company offers the best rates for your circumstances.

Do all insurance companies use insurance scores to determine rates?

Most auto insurance companies, including major insurers, use insurance scores as part of their process for determining the drivers’ rates. However, there are several states that prohibit using credit-based insurance scores to determine car insurance rates. Those states are:

• California
• Hawaii
• Massachusetts
• Michigan.

Several other states also prohibit using credit-based insurance scores as the sole factor determining a driver’s insurance rates and limit the kinds of personal information used when calculating auto insurance rates. Since laws often differ between states, it’s best to check with your state’s insurance regulation division to determine whether insurance scores are permitted where you live.

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How do insurance scores get calculated?

Unfortunately, there’s no such thing as an insurance score calculator. Instead, the insurance score calculation process varies based on each insurance company’s proprietary methods and whether they utilize a third-party vendor, and it’s often impossible to know the specific factors that go into calculating a driver’s auto insurance score. 

However, your accident history, moving violations from the last 10 years, previous insurance claims, and credit history can all impact your insurance score.

Among the various factors insurance companies consider when determining your insurance score, your credit history can significantly impact your car insurance rates. Factors that are often taken into consideration by credit bureaus when evaluating your credit history include:

• Late and on-time payments over time.
• The average duration of time between a bill’s payment and due date.
• Credit history length.
• Diversity of lenders and creditors.
• Number of credit inquiries.
• Number of open credit accounts that are in good standing.
• A low credit utilization compares to the amount of credit available.
• Previous defaults, including bankruptcies, foreclosures, repossessions, etc.

Understanding more about your insurance score is important to finding lower rates.

How to Check Your Insurance Score

Since the insurance score calculation process is proprietary, most insurance companies don’t provide answers about — or access to — your insurance rating. So, it’s not currently possible to check your auto insurance score.

Still, it’s possible to get a general idea of your insurance score by taking stock of your driving history, past insurance claims, and credit score. While your credit score is separate from your insurance score, insurance companies may be more likely to offer a better rate to drivers with higher credit scores. Learn more about auto insurance and credit scores.

What’s a good auto insurance score?

Since there’s no uniform car insurance score scale, each insurance company has its own car insurance rating scale that determines what a “good” and “bad” insurance score is. However, higher insurance scores are better than lower scores.

Like credit scores, auto insurance scores can range from 200 on the low end to 977 on the high end, depending on the company that calculated the rating. Find out more about what is a good auto insurance score.

Ways to Boost Your Auto Insurance Rating Score

Since good credit can positively impact your auto insurance score, it’s important to ensure your credit history reflects your ability to manage debts responsibly with no delinquencies. A few ways to boost your credit score include:

• Make on-time payments. By avoiding compounding interest and making payments on time to credit card companies and other lenders, your credit history will reflect your ability to manage your finances responsibly. This factor can result in more favorable rates from insurance companies.

• Diversify your credit. Diversifying credit can indicate you can manage different debt and liability types. However, exercising caution and judgment is important since a loan or credit card could negatively impact your credit score.

• Reduce credit utilization. Using less credit than is available to you can indicate your ability to manage your finances and debt responsibly.

If you want to find out why your auto insurance score is going down, you can get more info here.

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Auto Insurance Scores: The Bottom Line

An auto insurance score is the car insurance companies’ rating to predict how likely you’ll file an accident-related insurance claim. Since it’s one of several factors determining the rate you’ll pay to insure your vehicle, your insurance score can play a significant role in determining your rates for car insurance coverage.

By understanding the factors that make up your insurance score — and making responsible improvements to how you drive and manage your finances — you could boost your insurance score and lower the cost of insuring your vehicle over time.

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