How to Improve Your Auto Insurance Score

An auto insurance score is a numerical indicator used by insurance companies to assess a driver’s risk. This score helps determine the likelihood of future claims and directly influences auto insurance premium rates. Understanding this score and its components is important for consumers aiming to manage their insurance costs effectively.

Understanding the Components of Your Auto Insurance Score

An auto insurance score, often called a credit-based insurance score, predicts the probability of an insurance claim. While derived from credit report information like a standard credit score, it forecasts claim likelihood rather than credit repayment ability. Insurance companies calculate these scores using various information categories.

Credit-based information heavily influences the auto insurance score. Key factors include payment history and outstanding debt. The length of credit history, new credit applications, and the credit mix also contribute. FICO, a data analytics company, weighs payment history at approximately 40% and outstanding debt at about 30% in its insurance scoring models.

A driver’s record is another factor, including past traffic violations and accidents. A clean driving record results in lower premiums, while violations or at-fault accidents increase rates. Insurers also consider claims history. Frequent claims indicate higher risk, negatively impacting the score.

Continuous insurance coverage also influences the score. Gaps in coverage suggest higher risk and can lead to increased rates or difficulty obtaining new policies. Uninterrupted coverage contributes positively to an auto insurance score.

Actionable Strategies for Improving Your Score

Improving your auto insurance score requires managing the data points used in its calculation. Focusing on financial habits can enhance the credit-based portion of your score. Consistently paying all bills on time is fundamental. Timely payments demonstrate financial reliability.

Reducing outstanding debt, especially on revolving credit accounts, is another step. Keeping credit utilization ratios low, ideally below 30% of your available credit, indicates responsible credit management. Avoiding new credit applications prevents temporary score dips. Regularly reviewing credit reports for accuracy allows for error correction.

Practicing safe driving habits and avoiding accidents are effective ways to maintain a clean record. Even minor traffic violations can increase premiums, while major offenses can nearly double insurance costs. Some insurers offer discounts for completing approved defensive driving courses.

Managing claims history benefits your score. Consider the financial implications of filing small claims. For minor damages, paying out-of-pocket might be prudent rather than filing a claim. While inquiries about potential coverage do not count as claims, filing an actual claim can appear on your report.

Maintaining continuous insurance coverage avoids lapses in your auto insurance history. Any period without active coverage can lead to higher future premiums. Setting up automatic payments and renewing your policy on time prevents unintentional gaps. If switching insurers, ensure your new policy begins the same day your old policy ends.

Reviewing and Verifying Your Data

Reviewing the data used to calculate your auto insurance score ensures accuracy. You are entitled to a free credit report annually from Equifax, Experian, and TransUnion via AnnualCreditReport.com. If you find inaccuracies, you have the right to dispute them.

To dispute a credit report error, contact both the credit bureau and the business that furnished the incorrect information. Submit disputes online, by phone, or via mail with supporting documentation. The credit bureau must investigate your dispute within 30 days. If an error is confirmed, the inaccurate information must be corrected or removed.

Your driving record, or Motor Vehicle Record (MVR), can be obtained from your state’s Department of Motor Vehicles (DMV). This report details your driving history. While the dispute process for MVR errors varies by state, it involves contacting the issuing agency with evidence.

For claims history, the Comprehensive Loss Underwriting Exchange (CLUE) report is available. This report includes up to seven years of your auto and property claims history. You are entitled to one free CLUE report annually, which can be requested directly from LexisNexis online or by phone.

If you discover errors on your CLUE report, dispute the information with LexisNexis. LexisNexis will contact the reporting insurance company to verify the information. They must investigate and notify you of the results within 30 days. If information is inaccurate or cannot be verified, it must be removed or corrected. You can also add a personal statement to your CLUE report to explain entries.