Insurance ratings play an important role in calculating the cost of your insurance premiums, according to the Insurance Information Institute (Triple-I). Insurance companies assess the risk they incur to provide coverage to a customer. This expected cost, among other factors, is used to determine how much the company should charge a customer in premiums to avoid losing money.
The vast majority of insurers in the United States are private companies 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 compensate for this increased margin of error, companies would likely have to raise prices for all customers.
Insurers use several factors to determine your insurance score. Everything from payment history to unpaid 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 indicates how much your insurance score is determined by each variable.
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Payment history (40%), overdue debt (30%), length of credit history (15%), finding new credit (10%), credit composition (5%).
Assurance scores range from good to bad. The higher your insurance score, the higher an insurer will rate your level of risk in states where insurance scores are a scoring factor. Insurance scores range from 200 to 997, with anything below 500 considered a bad score, and anything between 776 and 997 considered a good score.
So what is a good insurance score? Anything over 775. However, please note that all insurers have different underwriting standards for pricing home and auto policies.
If you have any questions or any other insurance needs, please do not hesitate 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.