What is an Auto Insurance Score?

One of the biggest unknowns in the auto insurance industry for consumers is the auto insurance score. You may have no idea what an auto insurance score is; you may have never even heard of it until now. It does take a bit of explanation. If you are searching for information about how to get the best auto insurance rates, then you really do need to take a few minutes to learn what is an auto insurance score and how insurance companies use your score to determine your premiums.

Auto Insurance Scores Versus Credit Scores

While an auto insurance score is based upon your credit record it is not the same as your credit score. It is possible to have a really good credit score with the 3 major rating agencies and not have an auto insurance score that gets you discount rates. The reason is that auto insurance companies see the major credit factors in a different light. They focus on how credit history predicts the chances of auto insurance claims. For car insurance companies it is not about will you pay your bill, it is about the likelihood of someone with a specific credit history to file an auto insurance claim and how much that claim will be.

Defining an Auto Insurance Score

In general, an auto insurance score is calculated from your credit reports. Insurance companies choose specific statistics from your credit report to use in their scoring system and determine a score based upon auto insurance claims statistics. An auto insurance score is difficult to define specifically because most companies tweak their scores on a regular basis. Underwriters are always analyzing statistics and when there is a shift, they change their focus and scores can change.

Auto Insurance Scores Vary

You auto insurance score will vary from company to company. Each company comes up with their own specific algorithm to determine your score based upon the data they have collected from customers in the past. For this reason, it is possible to have a good score with one company and a not so good score with another. Keep in mind, however, your auto insurance score is an important factor in determining rates, but still only one of the many.

Factors Affecting Your Auto Insurance Score

While each company does have their own scoring system, there are several general factors that are common. The main difference being the weight attached to each from particular companies. The main factors are:

  • Percentage of available credit used
  • Length of credit history
  • Timeliness of paying credit bills
  • Prevalence of past due accounts
  • Number of recent credit applications

So, things such as applying for too much credit within the last few months or having your credit limits nearly reached on several accounts can result in higher auto insurance premiums. By the same token, take care of your credit and you can generally expect low car insurance premiums.

Compare Auto Insurance Rates With Online Quotes

If you are looking for cheap auto insurance rates right now, you do have an option that may help. While you work on fixing your credit to get a better score, you can use auto insurance quotes to find the cheapest rates available. Using our free rate quote tool can help you find the best deal in just a few minutes. In 6 months or so, after you have improved your auto insurance score, come back and get more quotes to see how much you can save.

Types of Coverage Every Driver Should Know

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Finding an auto insurance company is not difficult, but finding the right auto insurance company can be challengling. Policy provisions vary from company to company, as do premium rates. When you are considering which auto insurance company to get coverage from, it pays to do some research to make sure that the company is a reputable one. You also want to ensure that your company has the assets to pay out a large claim, if that becomes necessary…
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