Under III, if you have a better credit-based insurance score, an excellent driving record, and no claims on your record, you'll typically qualify for lower rates. This score is just one of the many factors used to calculate your premium. Together, these factors help insurance companies assess the level of risk of their policyholders. Studies have shown that there is a correlation between credit-based insurance ratings and the claims filed.
Statistically, the lower your insurance score, the more likely you are to file an insurance claim. Because of this increased risk, insurance companies tend to charge more if you have a lower credit score. Keep in mind that getting a car insurance quote won't affect your credit rating. This is because there are two types of credit checks: hard inquiries (which do affect your rating) and flexible inquiries (which do not affect your rating).
When an insurance company examines your credit, it's considered a soft inquiry, unlike the difficult inquiries made by credit and loan companies. All insurance products are governed by the terms of the applicable insurance policy, and all related decisions (such as coverage approval, premiums, fees, and charges) and policy obligations are the sole responsibility of the insurance insurer. This is because the credit score is used to estimate how likely you are to pay your debts, while the credit-based insurance score analyzes the likelihood that you will file an insurance claim. Car insurance data includes coverage analysis and details about drivers' vehicles, driving records, and demographic information.
While credit ratings try to predict the likelihood that a consumer will be 90 days late on a payment over the next 24 months, credit-based insurance ratings try to predict the likelihood that a consumer will file insurance claims that will cost the company more money than it collects in premiums. For example, one insurance company might decide that a score of 750 or higher allows for the lowest car insurance rates, while another might require a score of 700 or more to receive the best price. No, there isn't a strong credit attraction when you request an auto insurance quote, so comparing prices won't affect your credit rating. Some insurers will provide you with contact information to learn more about your score, especially if your car insurance rate was affected by your credit.
While your credit score and credit-based insurance score aren't the same thing, your credit score can be a good indicator of your credit-based insurance score. Insurers obtain their driving and insurance records from their Comprehensive Loss Underwriting Exchange (CLUE) car report. Only five states (California, Hawaii, Massachusetts, Michigan and Washington) prohibit the use of credit ratings when insurers determine the rate of their car insurance. California, Hawaii, Massachusetts and Michigan do not allow insurers to use credit to determine auto insurance rates.
Some states, including California, Hawaii, Washington, Massachusetts and Michigan, strictly limit or completely prohibit the use of credit information by insurance companies to determine auto insurance rates. With this information, Insurify can provide drivers with information on how companies set the price of their auto insurance premiums. Statistical data analyses, including a study conducted by the Federal Trade Commission, show that credit-based insurance ratings can accurately predict future insurance claims. Other factors that affect your monthly auto insurance premium include your age and gender, type of car, driving history, claim history, the deductible you select, and even your marital status.