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Why is an insurance score important?

Nick Beninato

Insurance statements play a significant role in calculating the cost of your insurance premiums, according to the Insurance Information Institute (Triple-I). Insurance companies determine how much risk they are taking on in order to provide coverage to a customer. These expected costs, among other things, are used to determine how much the company should charge a customer in premiums to avoid losing money.

The vast majority of insurers in the US are private businesses and cannot survive without making a profit. Without the use of insurance scores, companies would have less accuracy in predicting a customer’s costs. To offset this increased margin of error, companies will likely have to raise rates on all customers.

Insurers use several factors to determine your insurance score. Everything from payment history to outstanding debt to credit mix is ​​calculated into your score. Each of these variables can be obtained from your credit report. Below are the most critical factors, as listed by the National Association of Insurance Commissioners (NAIC). The percentage shows how much of your insurance score is determined by each variable.

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Payment history (40%), outstanding debt (30%), credit history length (15%), pursuit of new credit (10%), credit mix (5%).

Insurance quotes range from good to bad. The higher your insurance score, the better an insurer will judge your level of risk in states where insurance scores are a rating factor. Insurance scores range from 200 to 997, with anything under 500 considered a poor score, and anything from 776 to 997 a good score.

So what is a good insurance quote? Anything above 775. However, note that all insurers have different underwriting standards for rating auto and home policies.

If you have questions or any other insurance needs, feel free to contact Nik at DPA Insurance Services, 402-682-1691.

This advertisement is provided by DPA Insurance, 1810 N. Bell. For insurance questions contact (402) 682-1691 or visit www.dpainsuranceservices.com on the web.

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