Uncovering The Reason You Have An Auto Insurance Score |
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Richard Larson
March 29, 2013
Uncovering the Reason You Have an Auto Insurance Score
If you own a car, buying auto insurance is one of the most important things you ought to do. Driving without insurance increases your financial and legal risks if your car was to be involved in an accident. When selling insurance policies to you, many insurance companies base the amount of premiums that they will charge you, on your individual credit score. Why should the premiums you have to pay be related to your credit history, which has got no relation to your driving history? Perhaps this is a question that you might want to raise in such a case.
There is no doubt that many people are still at a crossroads when debunking the real essence of an auto insurance score and why it has to be a factor in vehicle insurance. There is a close relationship between auto insurance score and the insurance policy itself.
What is an auto insurance score?
Also known as credit-based insurance policy score, an auto insurance score is basically a three-digit number which is used in predicting your likelihood of filing insurance claims. The credit score that you get comes from the three main credit bureaus and mostly ranges between 150 and 950.
It is also important to note that this insurance score has got nothing to do with your driving record and again should not be related to credit score. It is just auto insurance, score as such.
Who uses this?
These scores have become quite common in the past couple of years. They are used by the largest auto insurers from across the globe. This includes GEICO, Allstate, StateFarm, Summit General Insurance, and Nationwide. You will notice that your scores can vary from one company to another. This is because the factors used in calculating the scores are also pretty varied.
How your credit affects your auto insurance rates
There is no doubt that a large number of insurers make use of credit information in setting premiums. However, there are still a couple of other factors that come into play in these deals, including driving records and market demographics.
Credit scores are not in any case used in predicting whether or not you will have to settle your premiums. They are simply meant to define whether or not you qualify to file a claim. This means that they are used in estimating any likelihood of the company incurring losses in the near future as opposed to your payment behavior in the near future.
However, the good news is that you can benefit a lot from good insurance scores that are coupled with good driving records. Therefore, you might get a lower rate than what you thought you could get by only taking into consideration your driving records.
What is your auto insurance score?
The only way you can find out your insurance score is to visit your auto insurer. Most insurance companies calculate your score by using your credit scores sourced from the three main credit bureaus. TransUnion is one of the most preferred options. Again, just like I had stated earlier, vehicle insurance scores are in the form of a three-digit number ranging between 150 and 950, according to most credit scoring organizations.