What is an insurance score?
Your insurance score helps providers determine how much to charge you for coverage by predicting how likely you are to make a claim. Some insurance scores are based on credit score, while other types of insurance scores are based on your claims history. Each insurance company will have a different way of determining scores so it’s important to shop around to find the best coverage at the best rates. Start here with our free insurance tool below.
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
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UPDATED: Sep 8, 2023
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Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Sep 8, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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An “insurance score” helps insurance companies determine if you qualify for insurance based on their underwriting guidelines.
It’s similar to a credit score used by creditors (such as credit card issuers and mortgage lenders) to assess your creditworthiness.
Credit-Based Insurance Scores
This article refers to credit-based insurance scores, which are numbers used to illustrate your insurance risk at a particular point in time.
They help insurance companies more easily predict if you’ll file a claim in the near future, which will result in a loss for the company.
Read more: Auto Insurance Score: What is it and why does it matter?
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People with Poor Credit File More Insurance Claims
Research has shown that individuals with poor credit scores are more likely to file insurance claims, costing the insurance company more. Put simply, that pushes their insurance rates up.
Essentially those with good credit scores tend to take better care of their belongings (car, home, etc), leading to fewer filed claims, which saves insurance companies money.
Just like with standard credit scores, the higher your insurance score, the better off you are in terms of pricing. And vice versa.
So if you’ve filed a lot of claims in the past, your insurance score will reflect that and be lower as a result.
Read More: Do insurance quotes affect your credit score?
Insurance Score vs. Credit Score
Traditional credit scores differ from insurance scores in that they predict your chance of default, otherwise known as missing a minimum payment.
Your insurance score focuses mainly on propensity to file a claim, and when combined with your claims history and driving record, determines what rate (insurance premium) you’ll pay.
So it’s a similar approach, just tailored a bit differently based on the unique industries involved.
Types of Insurance Scores
There are a number of different insurance scores out there, but the one most commonly used by insurance companies was created by FICO, which also created the all-powerful FICO score.
It is referred to by different names at the three different credit reporting agencies:
InScore® at Equifax
Fair Isaac Insurance Risk Score® at TransUnion
Experian/Fair Isaac Insurance Score at Experian
Just like traditional FICO scores, these insurance scores can and will vary among the different credit bureaus, as they calculate things differently and take in information at different times.
So don’t be surprised if you see some divergence when viewing scores from different providers.
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Are Insurance Scores Bad?
Those behind the creation of insurance scores argue that the good outweighs the bad because most people have good credit, and thus will pay less for insurance as a result.
And insurance scores help insurers better forecast the future, allowing them to price policies more accurately, lowering costs for the bulk of their customers.
Keep in mind that individual insurance companies also may have their own proprietary insurance scores (financial responsibility scores), and not all insurers use credit-based insurance scores to determine your rate or eligibility.
But it will likely become more commonplace in the near-future as more and more insurers rely on big data to price premiums.
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.