What Is an Insurance Score?

Insurance providers go over all the possible factors that make a certain insurance applicant “insurable” or not. This is defined by an insurance score. As an insurance holder, it’s essential to understand what constitutes your insurance score so that you can work on ways to improve it and get better insurance quotes.
Certain insurance providers use this insurance-credit scoring, but it’s important to know that all insurance companies don’t rely on this system.
What is insurance scoring and how is it calculated?
Insurance companies always try to come up with ways to predict the likelihood of loss with each applicant. They do so by analyzing the potential risks involved with a particular applicant. Based on this assessment, they calculate insurance quotes and premiums.
An insurance score is calculated from information derived from your credit report. Credit information is known to be a good source to predict future insurance claims and accidents.
The credit report consists of financial information like credit history, credit utilization, length of history, negative items, insurance claims, and more. Based on your past insurance claims, the company is able to foresee how risky you may be for an insurance provider, thus, determining your insurance rate.
Is my insurance score the same as my credit score?
Your credit score is a summary of your financial position and creditworthiness. The credit score is used by lenders to determine whether or not they can trust you with funds. An insurance score, on the other hand, calculates the likelihood of becoming involved in a future accident and insurance claim. Other than your credit score, information is gathered from other policyholders with similar credit scores and characteristics as you.
While your income determines whether or not a lender should provide funds, an insurance provider does not rely on job history or income when providing an insurance policy.

What are the favorable credit items that can help with my insurance score?
Favorable insurance information is always welcome on a credit score. It can help toward lower premiums and even result in an insurance discount. Below-average factors, on the other hand, can negatively impact your insurance premium.
Favorable credit factors include:
• A long credit history
• Open accounts with a good payment history and balance
• No overdue payments
• Low credit utilization
Unfavorable credit factors:
• Late payments
• A high credit utilization rate
• Many credit applications
• Negative items
• Rejected credit applications
If you’re based in Indian Orchard, MA, and are in search of a reliable home insurance service, get in touch with Western Mass Auto Insurance. Our insurance agents in Indian Orchard are well-versed and experienced in closing all forms of insurance deals.