What Is an Insurance Score?

An insurance score, also known as an insurance credit score, is a rating computed and used by insurance companies that represents the probability of an individual filing an insurance claim while under coverage. The score is based on the individual’s credit rating and will affect the premiums they pay for the coverage. A higher score will result in lower premiums and vice versa.

Understanding Insurance Scores

An insurance score is a key component to the total premium that an individual pays for health, homeowners, auto, and life insurance policies. Insurance companies determine an individual’s score, in part, by using property claim databases like the Automated Property Loss Underwriting System (A-PLUS) and the Comprehensive Loss Underwriting Exchange (CLUE). 

The insurance score ranges between a low of 200 and a high of 997. Insurance scores of 770 or higher are favorable, and scores of 500 or below are poor. Although rare, there are a few people who have perfect insurance scores. Scores are not permanent and can be affected by different factors. There are several ways to increase low scores and possibly lower premiums. To begin, a consumer will benefit by improving his or her credit score and paying bills on time, as well as reducing debt. Also, limiting the number of insurance claims filed over a certain period can help boost an insurance score.

Key Takeaways

  • An insurance score is a credit rating used by insurance companies to assess a potential insured's level of risk.
  • The insurance score is the primary determinant in the total applied premium.
  • Scores range between 200 and 997, with low scores reflecting higher risks.
  • What constitutes a good score varies for different types of insurance and rating companies.

Insurance Score and Auto Insurance

Auto insurance companies have different standards for what they consider a good score. Some may offer lower premiums for scores in the 800 range, while others will only require scores in the 700 range to qualify for certain discounts.

Data analytic companies like the Fair Isaac Corporation and ChoicePoint have different scales for how they interpret auto insurance scoring. The Fair Isaac Corporation’s scale ranges between 300 and 900. Scores above 700 are considered good, and anything above 800 is great and of little risk for the company. ChoicePoint’s scores range between 300 and 997, with good scores nearing the higher end of the scale. Consumers with ChoicePoint credit files may obtain a free report.

$15 million

The amount ChoicePoint paid as a civil penalty, resulting from a 2005 security breach that exposed millions of consumers' data.

A low insurance score can be costly, especially for auto insurance coverage, which is legally required in the US. For example, if an individual’s insurance score causes their auto insurance premium to increase by $25 per month, they will pay approximately $300 more in premiums per year. In four years, the premium difference will be $1,200. Over 10 years, it will cost them $3,000, an amount that could be invested or spent in other ways.