Insurance Score

What is 'Insurance Score'

An insurance score, also, known as 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.

BREAKING DOWN 'Insurance Score'

An insurance score is a key component to the total premium that an individual will pay 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, or A-PLUS, and the Comprehensive Loss Underwriting Exchange, or CLUE. 

This number will range between a low of 200 and a high of 997. Insurance scores of 770 or higher are typically considered to be good. A poor score is considered to be any number below 500. There are very few individuals who possess a perfect insurance score, although it is possible to have one. There are several ways to increase a low score, and possibly lower the premium paid for coverage. One way for someone to increase their insurance score is to improve their credit score and history by paying bills on time and lowering the total amount of their debt. Also, limiting the number of insurance claims filed over a certain period of time can help boost an insurance score.

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 the Fair Isaac Corporation and ChoicePoint have different scales for how they interpret auto insurance scoring. The Fair Isaac Corporation’s ranges between 300 and 900. Scores above 700 are considered good. Anything above 800 would be considered great and of little to no risk for the company. ChoicePoint’s scores range between 300 and 997.

A bad insurance score can be costly, especially when looking at auto insurance because of the need for people to drive. For example, if an individual’s insurance score costs them an extra $25 per month for auto insurance coverage, they will have paid $300 in higher premiums over the course of a year. In four years, the premium difference would be $1,200. Over 10 years time, it would cost that individual $3,000.