How Your Insurance Score Impacts Your Car Insurance Rates

How Your Insurance Score Impacts Your Car Insurance Rates

What's an insurance score?

An insurance score is similar to a credit score, but insurance scores use information in your credit file to help determine how likely you are to file an insurance claim. Different insurance companies calculate insurance scores differently, but with most insurers your insurance score is a significant factor in determining your rate -- sometimes just as important as your driving record.

Why do insurers care about my credit history?

Studies have shown a direct correlation between a person's credit and the likelihood of him or her filing a claim. Individuals with poor credit history are generally more likely to file car insurance claims, so they will often pay above-average car insurance rates. Similarly, people with excellent credit histories are generally less likely to file car insurance claims and will often be rewarded with lower-than-average rates.

Is this fair?

Many people don't like the fact that their credit scores are being used as an underwriting factor for their car insurance rates, but for most drivers this fact isn't going to change anytime soon. Three states -- California, Massachusetts and Hawaii -- currently forbid insurers from using credit data when determining car insurance rates. But every other state allows it to some degree.

How can I keep my rates as low as possible?

The best thing to do is to take excellent care of your credit. But if your credit score is already low and you need to purchase an auto insurance plan right away, there's likely not much you can do about your rates in the short term.

The next best thing to do is to shop around for car insurance quotes from multiple providers. All carriers use insurance scores in different ways, so you may be able to get a better deal at a different provider, but consider the potential consequences of rate shopping before you do it.

Editorial Note: The editorial content on this site is not provided by the bank or issuer. Opinions expressed here are author's alone, not those of the bank or issuer, and have not been reviewed, approved or otherwise endorsed by the bank or issuer. Credit Karma may be compensated by companies mentioned through advertising, affiliate programs or otherwise. It is this compensation that enables Credit Karma to provide its members with services like free access to your credit scores and free monitoring of credit and financial accounts at no charge.

 

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

All Comments

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1 Contribution
43 People Helped

Helpful to 43 out of 50 people

Complete bull****! how can you have a good credit score and very poor insurance score? with a clean driving record!! not one ticket, and any accidents (years old) not even my fault. Obviously another scam to put more money in the wrong pockets!

Top Contributor

Reply by
SES1894

11 Contributions
25 People Helped
Helpful to 12 out of 12 people

Traffic tickets?  Traffic tickets are not known by the credit reporting agencies and thus do not contribute to your credit score.  But the insurance companies certainly buy that from your Secretaries of State.  Illinois has done this for at least 50 years.

Reply by
DJBUCKETHEAD

2 Contributions
3 People Helped
Helpful to 3 out of 4 people

you must have filed a claim after the accident...which makes you likely to file a claim...which loweres your score

Top Contributor
33 Contributions
508 People Helped

Helpful to 141 out of 154 people

Car Insurance is a complete rip off. What does my Credit have ANYTHING to do with my driving record. It is totally absurd and they just use it as a ploy so that they can charge you more for a bogus reason. First off all, Car Insurance is required by law, so if I want to drive I MUST have car insurance. They don't give you any leeway or grace period in paying. You pay up front and if you don't pay within a few days, they report you to the DMV which will result in suspension of your registration and eventually your driver license. So the need to pay your insurance is more important than your cell phone bill otherwise you have to pay lapse fees with your DMV and get reinstated.

In addition they state that people with bad credit are more likely to file a claim, which sound very bougs to me and I don't know who conducted that research. We all know that everytime you file a claim your insurance goes up plus you have a deductible so why would anybody just file a claim unless they had a real reason to. Isn't that what insurance is for? Unfortunately, this business turned into "We will insure you but you better not file a claim".  Insurance is suppose to "insure" you for any mishapp that may occur.

but just like the article says, there is nothing you can do about it, it is government mandated and you have to have insurance if you want to drive, these insurance companies continue to rip us off because we do not get anything back from our years of payments, insurance companies get to keep all of it and when you need it they will try anything to NOT do what they suppose to. It's legal extortion. point blank

Reply by
flipped54

2 Contributions
41 People Helped
Helpful to 41 out of 52 people

Yes, I agree, that's why corporate America exists.  To make as much money as they can, when they can and where they can.  They have absolutely no empathy, sympathy nor do they care about anyone but themselves.  This is pure, unregulated Capitalism which is embraced wholeheartedly by those who are in the rip off business of insurance and by those in Congress who do not like a system where all Americans are fairly rated for insurance.  As it is now the rating system is grossly flawed.  My personal opinion, but if it is out of line let me know.  

Reply by
hoinburg182

4 Contributions
55 People Helped
Helpful to 43 out of 46 people

One thing I have found that effects my Insurance score as well my FICO, is a high debt utilization %. The closer I got to my credit limit the worse my Insurance score got. I paid down my cc debt well below 30% and poof my Auto insurance renewal went down around 11% for 6 months. Everytime I shop for new insurance, I use this method and my friends dont understand why my Insurance has better coverage for a cheaper premium. Something to try and I'm located in MI, The second highest rated state ( thanks to no-fault insurance and the unlimitied medical coverage required by this fine state MCCA).

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Reply by
SES1894

11 Contributions
25 People Helped
Helpful to 0 out of 1 people

Since the insurance companies cannot have a personal relationship with their customers they have to rely on profiles that take into account age, gender, marital status, traffic tickets, credit scores and numerous other details.  With personal relationships the agent could possibly accurately judge a customer more accurately that the profile information currently does.  But in today's fluid society and with the cost of labor, to aay nothing of the agents that would over-rate their friends and cost  the company to lose money, that's not going to happen.

Unfortunately, there will be outliers that fall into a higher insurance rate profile that currently do, and will in the future have very good records.  If the insurance companies actually had personal relationships and knew the customers first hand many peoplewould get lower rates, and correspondly, some others might get higher rates

Reply by
johnnyreth

1 Contribution
0 People Helped

Yep. Nonsense. Total BS excuse to take more money from our pockets.

Reply by
mellixson

1 Contribution
1 Person Helped
Helpful to 1 out of 1 people

All I have to say is AMEN !!!M

2 Contributions
35 People Helped

Helpful to 21 out of 23 people

I'm paying $390 a month with progressive.  I have a poor insurance score.  My friend quoted with the same vehicles and he was at $190 a month with excellent credit with 2 drivers and my same 2 vehicles.  Apparently insurance scores can double premiums.  This is extortion and should be illegal in every state.

1 Contribution
21 People Helped

Helpful to 21 out of 22 people

I would like to know what is the source of their research is. This article states that there is research, but fails to name the source. Is it insurance companies, independent research, or just some opinionated rhetoric that has been handed down by word of mouth.

When articles like this are written, it should be SOP to state the source of the information just as if it were a research paper.

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Reply by
SES1894

11 Contributions
25 People Helped
Helpful to 9 out of 9 people

It wouild be pretty simple for the insurance industry to do a match between credit scores and accident claim costs, seeing as how for some time the insurers have been getting their customer's credit scores and they already have the customer's total claims costs on their computer databases.  Several companies could pool this data anonomized to just zip code, score and if desired, age. Then by analyzing the whole pool  ofdata, get a state or national assessmentbroken down by age and score.

I was a computer programmer for 34 years.  Analysis such as this is actually very simple and easy to do.

5 Contributions
11 People Helped

Helpful to 11 out of 14 people

Since credit karma canNOT obviously post accurate ratings for people with EXCELLENT credit yet FAIR to POOR autoinsurances scores, I suggest credit karma just GIVE UP this "feature" entirely. it serves no purpose, has no bearing or merit, it is absolutely BASELESS. Redundant enough for you?  c'mon credit karma, you clearly don't know what you're doing!!!!!! I have an EXCELLENT credit rating. I have had credit cards for the last 23 years and have not once been late on a payment. How is it that my AUTO INSURANCE rating has gone from FAIR ( which is a joke) to POOR which is an even bigger joke?

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Reply by
SES1894

11 Contributions
25 People Helped
Helpful to 4 out of 5 people

Something else is affecting your auto ins score.  It could be your age or some other esoteric factor in your credit history, like address changes.

Reply by
busman05

2 Contributions
5 People Helped
Helpful to 5 out of 5 people

I agree .It is a joke. Also what has age got to do with it. . If you have a perfect driving record . Excellent credit. No claims. It is a complete rip off. Why don't the rest of the states do like California and not allow it. Could it be a little state insurance Company Lobbyists???

1 Contribution
50 People Helped

Helpful to 50 out of 55 people

ok where is CK to answer all of this ?  if a driver has had NO ACCIDENTS, NO CLAIMS, and excellent credit WHY WHY WHY is the driver rated POOR ?  i wonder if the person takes primarily mass transit would the score be EXCELLENT ? 

we need CK to stop hiding and step up to these comments ?  how can we LIKE you on facebook while you ignore the forum comments ? 

Reply by
gabrixjones

4 Contributions
0 People Helped
Helpful to 0 out of 1 people

The CK auto rating does not know about your driving record. Did you apply for credit recently? Multiple times perhaps in the past two years? That will drop your score. 

Reply by
tigger4444

9 Contributions
64 People Helped
Helpful to 18 out of 20 people

Really!!!  Why aren't they supplying the facts about this unfair practice??  Shouldn't they give the facts?  I appreciate other people and their input, but they could kick in and help!!!!

Reply by
robowrench

1 Contribution
40 People Helped
Helpful to 40 out of 41 people

typical bull****, my credit is in the top 10 percentile and my insurance score is in the toilet, no tickets, no accidents no claims.

Reply by
kaydi35

1 Contribution
0 People Helped

I'd love an answer to the question myself. I have excellent credit, no accidents, no claims, no tickets (if that were even to be taken into consideration) yet I have a poor rating for auto insurance and an excellent rating for homeowners insurance.  What is the difference???

2 Contributions
57 People Helped

Helpful to 57 out of 62 people

ok this gets even better.. my wife signed up to credit karma.

her actual FICO's are all under 600, 14 collections.  she has had 2 at-fault accidents in the last 3 years.

here credit karma score is 615, and here autoscore is "excellent"! (900+)

this is a TOTAL joke.

come'on credit karma, what is this crap?

1 Contribution
106 People Helped

Helpful to 106 out of 106 people

 I looked into this a few months ago when my insurance company started using insurance scores and raised my auto rates.  Here is what I found out:  1.  My credit score is "excellent" but my insurance score is "very poor," despite never having an insurance claim or late credit payments, apparently due to my cancelling a long time credit card that started charging an annual fee.  This had little effect on my still excellent credit score, but it really dinged my insurance score.  2.  My insurance company "batch orders" insurance scores (many people at a time) without using SS numbers, which initially pulled "late payment" information from someone else with my same  name.  It took me hours on the phone with Fair Issac to figure out the problem and have the insurance company pull my credit report again using my SS number - still my insurance score is very poor.   I wish my state (WA) would prohibit insurance companies from using insurance scores like the several other states that have done so.        

Reply by
jkollin

3 Contributions
21 People Helped
Helpful to 17 out of 21 people

FInd a different carrier. There really is a huge variance in rates in WA state. I personally like GEICO and they have many discount possiblities.

Reply by
fshaff

1 Contribution
44 People Helped
Helpful to 44 out of 45 people

I, too, have excellent credit but my insurance score dropped dramatically from May to June. It is now "very poor". I have Geico insurance. I have not had an accident and no driving infractions. What is going on? I live in WA. What is being done about this? I can only assume that age has influenced this score which would be age discrimination. My 72nd birthday is in June. 

Reply by
npw222

1 Contribution
0 People Helped
Helpful to 0 out of 1 people

Yes i agree Ive been driving for 15 years never been in  wreck. I Refuse to get insurace for the fact its 2 much . I do however check round for quotes And on advrage It will cost me $70 a month just to drive legal. I got got into a dispute with many of the Ins. comp and they admitted your actual driveing record hs little effect on the quote They stated its mostly baed on your credit . I want out of that braket .

Reply by
lifeantthomas

5 Contributions
6 People Helped

I guess I'm not alone in seeing the scam of it all. 

I don't have any debt so my credit score probably (I've never felt the need to check it) suffers from it. 

So what I'm hearing is that my choice is to either A) go into debt and pay interest to the banks or B) pay higher premiums to the insurers. 

The FIRE industry (Finance, Insurance, Real Estate) is destroying America with their rackets.

1 Contribution
13 People Helped

Helpful to 13 out of 15 people

i have a 750 good credit score but  a speeding and accident about 3 yrs ago. my auto ins score is low. when i had my acc. my ins went from 900 yr to 3000 a yr. it was my fault and in a new mini cooper. since iv changed ins and have gotten it down to 1500 a yr. it seems to me that ins companys will just use any manor that fits charging customers as much as possible. my advise, shop around and use j d powers to find a good ins co. keep in mind that u need a company that will stand by u when the time comes. i had amica and they were really good, exceept moving my rate to $3000. fyi usaa is the best but u must be or have been in the armed services.

1 Contribution
15 People Helped

Helpful to 15 out of 15 people

This whole thing is so frustrating!  Our credit is in the crapper after 2.5 years of being laid of and a 6 month old bankrupcy.  CK shows our scores very low in the poor range and our insurance score at 830, which is not bad.  Yet when we recently changed insurance companies we were told our rates were high due to a low insurance score, she said in the 400's.  We shopped around from cut rate companies to premium well known comapanies.  For some reason as it turned out we got better rates from a more well known company that I thought would cost a fortune.  While better priced it was still too high I thought which is where we learned about the insurance score.  Our agent looked at ouir driving records which have been clean for 10 years, no tickets no claims and we are over 30.  She said it must be our credit bringing it down and said that they have clients with DUII on their driving record but good credit that get way better rates than us!  Maybe credit should have a LITTLE to due with our rates, but it seems like it has a larger impact than it should.  I would think there would be a balance with the driving record having a heavier impact than credit.  Also I don't know how CK calculates the insurance score, like I said, an acutal insurance company has us in the 400's but CK has us in the 800's....I wish.

Reply by
hoinburg182

4 Contributions
55 People Helped
Helpful to 12 out of 13 people

Keep in mind. Most Insurance companies use a different number range for there insurance score. So with insurance co A you may have a low score because you dont fit the profile they are looking for. But with company B you may have a great score cause you are the client they build there business model from. If you fit the companies target market, you will have a good insurance score with them. 

Reply by
Tyronebobbyjoe

1 Contribution
1 Person Helped
Helpful to 1 out of 1 people

Auto insurance is definitely complicated. I think the only reason we all put up with it is just because we don't want to take a risk in not having it. We're scared that if we don't have it, something terrible will happen. The only solution we have is to find the best group we can. Good luck everyone! <a href='http://www.breitweiserinsurance.net' > http://www.breitweiserinsurance.net</a>

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