An insurance score is a numerical representation of your claims history and financial stability. It is calculated by taking into account several factors such as your frequency of insurance claims, severity of past insurance losses, and credit history. The score ranges from 200 to 997, with higher scores indicating a better insurance risk.
Benefits of a good insurance score for home and auto insurance
- Lower premiums: A good score often translates to lower premiums. The insurance company considers you as a lower risk, which means they are less likely to pay out claims, resulting in lower premiums.
- More coverage options: With a good insurance score, you may have access to more coverage options. For instance, you may be able to purchase a higher liability limit or opt for additional coverage options like gap insurance.
- Improved renewability: Having a good insurance score can also impact the renewability of your home and auto insurance policies. Insurance companies are more likely to renew your policy if you have a good insurance score, which means you will not have to search for a new policy every year.
In conclusion, having a good insurance score is essential for home and car owners. It can result in lower insurance premiums, more coverage options, and improved renewability. So, be sure to keep your it in good standing and enjoy the many benefits it has to offer.
How do I improve my insurance score?
Improving your score is relatively straightforward, and there are two main ways to improve it – boosting credit score and reducing your history of claims.
Here are some tips to help you boost your credit score:
- Pay your bills on time: Late payments and missed payments can severely impact your score. To avoid this, make sure you pay all your bills, including credit card bills, on time.
- Keep your credit utilization low: The amount of credit you use relative to your credit limit is called credit utilization. Try to keep your credit utilization low by not using more than 30% of your credit limit.
- Maintain a long credit history: The longer your credit history, the better your insurance score is likely to be. Try to maintain a long credit history by using your credit cards or loans responsibly and paying them off on time.
- Dispute errors: If you find errors on your credit report, dispute them as soon as possible. These errors can negatively impact your score, so it’s important to resolve them as soon as you become aware of them.
- Avoid opening too many new credit accounts: Every time you open a new credit account, it can impact your score. To avoid this, try to limit the number of new credit accounts you open.
Tips to help you improve your home and auto claims history:
- Regularly maintain your assets: Regular maintenance and upkeep can help prevent damage to your assets, which can reduce the number of claims you file.
- Educate yourself: Understanding your coverage and how to prevent claims can also reduce the number of claims you file. Take the time to educate yourself on insurance and risk management.
Severity of past home and auto claims
The severity of past insurance claims can also impact your insurance score. If you have a history of filing high-value claims, insurance companies may view you as a higher risk, which can result in a lower insurance score. To improve your score, try to reduce the severity of past claims – if you have severe recent claims those can take up to 7 years to no longer show up on your insurance history.
Here are some tips to help you reduce severity of insurance claims:
- Take preventative measures: Installing safety features in your home or car, such as smoke detectors or anti-theft systems, can help prevent serious damage and reduce the severity of claims.
- Choose a higher deductible: A higher deductible can reduce the severity of claims, as it requires you to pay a larger portion of the claim amount before insurance kicks in.
- Consider your coverage options: Not every bell and whistle offered by an agent makes sense for everyone. Does glass coverage make sense to have or is it best to not make a claim for a rock chip? Probably depends on how expensive it is to replace your specific vehicle’s windshield! Review your coverages carefully with your insurance agency to make sure what you’re paying for is something that provides you the best value.
In conclusion, reducing the frequency and severity of past insurance claims and boosting your credit score can greatly improve your insurance score. By following the tips outlined above, you can help to improve your insurance score, which will typically result in lower insurance premiums, access to better coverage options, and renewable insurance policies.
