Every proper driver has come across the term ‘car insurance score’ or ‘auto insurance score. Sadly, the truth is not everyone knows the role it plays on your insurance. Many don’t even know that certain states have banned the idea from their territories.
You must know how your car insurance score affects you and how to grow it. Keep reading to learn more.
An Explanation of Your Car Insurance Score
Car insurance companies commonly use what’s known as a “credit-based insurance score” for determining premiums. Traditional credit ratings, such as your FICO score, are not the same as these.
When compared to other scores, credit-based insurance ratings give various weights to different aspects. There is no such thing as a “good” insurance score since there are many different methods to calculate one.
Credit-based insurance scores are rarely available to consumers, and insurance companies commonly cite studies that link credit to the likelihood of a driver submitting a car insurance claim. According to insurance companies, the lower your “credit-based insurance score,” the less likely you are to file a claim, and hence, the lower your auto insurance rates.
Will It Cost You?
You will not necessarily spend more money if you use credit-based insurance scores. Some jurisdictions have researched the impact of using credit to determine insurance costs. When credit is used as a pricing factor, they found that most drivers pay less for vehicle insurance.
However, not all states believe it is good to use a credit-based insurance score. In California, Hawaii, Massachusetts, and Michigan, credit-based insurance ratings are no longer utilized to determine automobile insurance rates, and other states are contemplating whether to make the practice illegal.
It should not cost you money to boost your credit scores. As long as you keep proper practices as a driver, you are good to go.
