How to Check Your Insurance Score and Improve It

An insurance score helps providers assess the likelihood of an individual filing a claim, influencing policy premiums. This numerical rating is derived from various data points, primarily focusing on financial behavior. Understanding your score and its components offers insight into how insurers evaluate risk and determine coverage costs, helping you make informed decisions about your financial habits and insurance.

What is an Insurance Score

An insurance score is a numerical rating used by insurance companies to predict the likelihood of an individual filing a claim. It differs from a traditional credit score, which lenders use to assess creditworthiness for loans, though both draw from similar financial data. While a credit score indicates debt repayment ability, an insurance score forecasts future insurance claim behavior.

These scores are built using proprietary models that analyze various aspects of an individual’s history. A significant portion often comes from credit history factors, such as payment history, outstanding debt, credit history length, recent credit applications, and the mix of credit accounts. Timely bill payments and low credit card balances can positively influence this score.

Beyond credit information, insurance scores may incorporate past claims history through databases like the Comprehensive Loss Underwriting Exchange (C.L.U.E.) and the Automated Property Loss Underwriting System (A-PLUS). These databases contain information on reported insurance losses for auto and property. For specific types of insurance, factors like driving records for auto policies or property characteristics for home policies also play a part.

Why Your Insurance Score Matters

Your insurance score directly affects the cost of your insurance premiums for various types of coverage, including auto, home, and renters insurance. A higher score indicates a lower perceived risk to insurers, translating into more favorable rates. Conversely, a lower score signals a higher likelihood of filing claims, potentially resulting in increased premiums or fewer available policy options.

Insurers consider an individual’s financial behavior, as reflected in their insurance score, as an indicator. Studies suggest a correlation between certain financial behaviors and the frequency or cost of insurance claims. For example, individuals with lower credit-based insurance scores may face significantly higher premiums; for auto insurance, this could mean an increase of over 100 percent compared to those with strong scores.

This score also influences eligibility for certain policy terms or discounts. A favorable insurance score can lead to preferred rates or additional savings. As a component in an insurer’s underwriting process, insurance scores are considered alongside other factors like location, vehicle type, or home characteristics to determine the final premium.

Steps to Access Your Insurance Score

Checking your insurance score involves specific steps, as it is not as widely accessible as a traditional credit score. One direct approach is to inquire with your current or prospective insurance provider. While they may not provide the exact numerical score, they can often disclose if your score influenced your premium and which factors from your report had an impact.

You can also request reports from consumer reporting agencies that compile insurance-related information. Two prominent agencies are LexisNexis Risk Solutions and Verisk Analytics. LexisNexis offers reports such as the C.L.U.E. (Comprehensive Loss Underwriting Exchange) report, detailing your auto and property claims history. Verisk Analytics provides A-PLUS (Automated Property Loss Underwriting System) reports, which contain property loss and claims history.

Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of these specialty consumer reports once every 12 months upon request. You can request these reports through online portals, mail, or by phone. When you receive them, they will include a numerical score, if one is generated, along with specific factors that positively or negatively influenced it and the data sources used.

Understanding and Improving Your Insurance Score

Once you obtain your insurance score report, understanding its contents is key. The report details the factors that contributed to your score, often highlighting areas that may have caused a lower rating. This allows you to identify specific behaviors or data points that could be adjusted to improve your score over time.

If you find inaccuracies in the information on your report, you have the right to dispute them with the consumer reporting agency. The dispute process is similar to that for traditional credit reports: contact the agency in writing, explain the error, and provide supporting documentation. The agency is required to conduct a reasonable investigation free of charge. If the information is inaccurate, it must be corrected.

To improve your insurance score, focus on strengthening the financial behaviors that influence it. Consistently paying bills on time is a primary factor, as payment history significantly impacts the score. Managing and reducing outstanding debt, particularly on credit cards, also contributes positively. Maintaining a longer credit history and avoiding frequent applications for new credit can enhance your score. Additionally, being thoughtful about filing small claims can be beneficial, as claims history is a component of the score.