Insurance Score 101 and Rating Factors.

We have all heard of a credit score but what about an insurance score? Ever wondered how your friend the same age driving a similar car pays less monthly than you? Ever wondered how these companies come up with your annual insurance premiums and what plays a role?

Then this article is for you! We are going to talk a little about what an insurance score is, what factors play a role and what it means to you! We will also touch on some other key rating factors in determining your premium.

3 Key Factors Impacting Your Insurance Score

Credit Score.  While calculating your annual premiums insurance companies take into consideration your credit score. That score is used to determine your level of responsibility, so higher credit, lower risk, and lower credit higher risk. It is believed that your level of responsibility that your credit reflects directly corresponds with your driving patterns or homeownership. Studies have shown that individuals who are carrying a higher amount of debt are more likely to file claims. Although companies do check your credit score these inquires will NOT affect your credit score, they are registered as a “soft hit”, which has no impact on the rating factors.

Insight Score. Never heard of in insight score? No worries, it is a new rating factor. An Insight score takes all the bills you pay that do not report to your direct credit report such as phone bills, electric bills, cables bills etc., and creates a score just like your credit score. Just like mentioned above the lower your score the higher the risk.

Company Loyalty. When is the last time you switched Insurance Companies? If you are switching and shopping every year chances are you pay more than someone who has stayed with a company for the past 5 years. Companies look at your loyalty because if you have a claim chances are they are going to pay out more for you than you could ever reimburse. Your annual premiums are used to pay out claims if you file a $10,000 claim all while paying $70/month and then you switch companies within the year that company has just lost 10x more on you than you ever paid them. This is why we encourage every customer to stay with the same company for at least 2 years before looking at shopping, the more loyalty you can show to a prospective company the better the premium.

Although your insurance score does play a role in your insurance premiums there are many other factors that play a role in your insurance premiums.

Drivers Age. It should be no surprise that age and driving records play a huge role in determining premiums. Just like everything practice makes perfect and for the first 10 years of your driving career, you will be surcharged due to your lack of experience. Children on policies that are still in school can receive a good student discount for maintaining a GPA of at least 3.0

Driving Record and Claims History. Everyone knows that if you file a claim or receive a ticket more than likely your premium will reflect that at your next renewal. If you have tickets or claims coming up on your record they will stay there for insurance purposes for at least  3-5 years. Sometimes filing that claim for a windshield rock chip would cost MORE than paying out of pocket. This is why it is very vital to have an agent that cares about you (like Bailey Family Insurance) to keep you educated so you know what is covered, what coverages you need and help guide you through the claims process.

Vehicle Type.  What kind of car do you drive? 2-Door Sports Car? Mini Van? Classic Car? Every single make and model of car posses their own Safety Rating, which play a huge role in insurance premiums for those cars. If you are interested to see where your vehicle stands go to As the years go on technology in vehicles is widely advancing, such as the invention of back up cameras. Bumpers used to be a minor fix, they could be filled in sanded down and repainted no problem, now every new car has a back-up camera in the bumper when the bumper gets hit the insurance company then has to replace the pricey camera and then do the other necessary repairs.

Current Liability Limits. The liability limits you currently carry play a huge role when companies are determining your responsibility level. If you are carrying those state minimum limits and expect to get a competitive price, think again. It has been proven that individuals that carry lower liability are more likely to have accidents and file claims. Individuals with higher limits are less likely to have lawsuits filed against them because of the amount of protection they have. It is a good rule of thumb to always carry as much liability as you do assets in order to best protect yourself.

Annual Mileage. How far away do you live from your Job? How much time do you spend on the road? Do you have a work vehicle you drive regularly? This is something insurance companies have been using to determine premiums since the beginning, they are now just getting more creative in the way they find out if you are actually driving the annual miles you claim. Many insurance companies are using a service that was created by local auto-bodies and vehicle servicing centers which will tell them your mileage everytime you take your car in for service, they are using this information to determine your annual mileage. If you drive your personal vehicle for work and travel often you can assume your premium will be higher than someone who lives 3 miles from their workplace. On the other hand, if you drive a car given to you by your employer and you have never told your insurance agent that you are not maximizing your discounts.
Keep in mind that there are other factors that play a role in insurance premiums other than the ones covered here but these are some vital tips and information. At Bailey Family Insurance we offer you choices and options, we can shop you with several different carriers all at once to see which ones fit YOUR needs best. Call or Text us today to see what we can do for you 217-441-2342!

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