What you need to know about insurance results

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Insurance carriers use your insurance score to predict how likely you are to file a claim. Find out how they work. (Shutterstock)

While you may have heard of insurance scores, you may not be sure what they are. Insurance scores are different than credit scores. While they do take into account your financial history, their main purpose is to measure how likely you are to file a claim.

Let’s take a closer look at what insurance scores are and what constitutes a good insurance score.

With Credible, you can easily compare homeowners insurance rates from top carriers.

What is an insurance score?

An insurance score is a three-digit number that insurance providers use to predict how likely you are to make a claim as a potential policyholder. When you apply for homeowners insurance, the insurer will consider this score to determine whether to offer you a policy and how much to charge you for premium insurance.

Because insurance carriers develop insurance scores using their own formulas, each insurer has its own way of calculating your score. A lower insurance score means you are perceived as a higher risk to an insurance provider. If you have a higher score, you are considered a lower risk policyholder and will usually pay lower rates.

While many states use insurance scores, some states prohibit or restrict their use, including:

  • California
  • Hawaii
  • Maryland
  • Massachusetts
  • Michigan
  • Oregon
  • Utah
  • Washington


What is a good insurance score?

Insurance scores can range from 200 to 997. Here’s a breakdown of what the different ranges mean:

  • Under 500 — poor
  • 501-625 — Below average
  • 626-775 Average
  • 776-997 — good

It is important to note that all insurers have different insurance rating standards home insurance policies.

How do insurers calculate insurance scores?

Insurance carriers consider several factors when calculating your insurance score. These factors can be found on your credit report and include:

  • Payment history (40%) — This shows whether you’re making timely payments on your credit cards, mortgage, car loans and other bills. Insurance providers want to see that you can make consistent on-time payments.
  • Amount of outstanding debt (30%) Outstanding debt is how much money you owe. The less debt you have, the less risk you pose as a policyholder to the insurer.
  • Length of credit history (15%) — Credit history is the length of time you’ve had a credit account, such as a personal loan, mortgage, or credit card. If your accounts have been open for a while and you’ve made timely payments on them, your insurance score will benefit.
  • How often do you apply for a new loan (10%) — The frequency of your new credit applications can reveal how risky you may be as a policyholder. If you open too many credit accounts at once, your insurance score can suffer.
  • Credit mix (5%) — Your credit mix is ​​how many different types of credit you have. If you have credit cards, mortgages, car loans, and student loans, your credit mix is ​​diverse and will likely help your insurance score.

Credible makes it easy to compare homeowners insurance rates from multiple insurance providers.

How to check your insurance score

If you are shopping for an insurance policy, you may be able to get an idea of ​​your insurance score from the insurance carriers you are considering. When an insurer gives you a quote, find out if they used an insurance score to calculate your rate. Then ask which risk category you fall into.

Another option is to claim your own Consumer Disclosure Report from LexisNexis, which collects data that many insurance carriers use to determine your score.

Since your credit is tied to your insurance score, it’s also a good idea to visit AnnualCreditReport.com and download free copies of your reports from the three major credit bureaus: Equifax, Experian and TransUnion. If you notice any errors or inaccuracies, dispute them with the appropriate credit bureau to potentially improve your score.

Insurance Score vs. Credit Score: Are They the Same?

Although your credit score plays a role in your insurance score, these two scores are not the same. Lenders look at your credit score to determine how likely you are to repay a loan. Insurance providers take your insurance score into account to determine how likely you are to make a claim. Insurers also base your insurance premium on factors other than your insurance score.


4 ways to improve your insurance score

If you build your credit score, you can improve your insurance score at the same time. To do this, you can:

  • Pay your bills on time. Do everything you can to make timely payments on your mortgage, credit cards, car loan, student loans and other bills. Even one missed payment can affect your score.
  • Pay off the debt. If you have delinquent bills, catch them up and make timely payments in the future. Aim for a credit utilization ratio of 30% or lower — that’s your total credit balance divided by your total credit limit.
  • Avoid new credit. Finding new loans or credit cards can lead to hard inquiries that can lower your credit score. For this reason, don’t apply for too many new credit accounts in a short period of time unless you absolutely need them.
  • Check your credit reports regularly. At least once a year, carefully review your credit reports. Note any errors and report them to the appropriate credit bureau.

Visit Credible to compare homeowners insurance rates from different insurance providers in minutes.

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