Simply put, an insurance score is different than a credit score but the usage is similar. Finance companies use your credit score to establish your interest rate for loans, credit cards and mortgages. Insurance companies use your insurance score to establish your insurance premium. Each insurance company uses their own algorithm to assign you an insurance score. The better your score, the better your insurance rate.
Data that makes up your insurance score includes: insurance history, length of time with previous insurance company, claims, tickets, elements of your credit report, current liability limits and many more. Even the insurance agents and underwriters aren’t told how the score is computed.
The data and weighted value of each criteria varies with each insurance company. For example, State Farm and Travelers Insurance will collect similar information but your score will likely vary with each company. This is where independent insurance agents have an advantage because we provide quotes from more than one insurance carrier. This gives you the best chance to get the lowest insurance rate. You can then easily breakdown and compare coverage. Aaaand you only have to make one call to an insurance agent to get multiple quotes.
Also an important note, your credit score is NOT pulled when you get an insurance quote or policy. The majority of the time, insurance companies don’t even require or know your social security number. Colorado insurance regulations do allow the use of your credit profile to help assign your insurance score.