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Colorado Insurance Blog

Insurance Score: What Is It And Why Does It Matter?

What is an insurance score?

An insurance score is how insurance companies rate for the likelihood that a policyholder will file a claim. Each insurance company uses slightly different formulas to calculate an insurance score. That’s one reason why your rate is not the same with each insurance carrier.

Why does it matter?

Your insurance score is how insurance companies determine the premium for your policies. The better insurance score you have, the lower your premium will be.

The specific car insured on a policy impacts the rate, but not everyone with the same car will pay the same premium.

The home insurance premium for two people with identical homes can also differ. If one person has a better insurance score, their premium will be lower. Even if they have the exact same coverage on the exact same home.

That may sound unfair, but the person with the better insurance score is less likely to file a claim.

Is your insurance score the same as your credit score?


Your credit score is based on your ability to repay amounts you have borrowed. An insurance score uses many factors to predict your likelihood of being in an accident or filing a claim.

In most states, insurance companies can use your credit history when determining your insurance score. So your credit score is not the same as your insurance score, but it can impact it.

Does my insurance score impact my credit score?


When insurance companies pull your credit to determine your insurance score, it’s a soft hit. Unlike a hard hit to your credit (like when you apply for a credit card or loan), a soft hit doesn’t have an impact on your credit score.

Some people don’t like providing their social security number out of fear of a negative impact to their credit score. That can hurt their insurance rates since it often results in a “no-hit” for their insurance score. A “no-hit” generally means a higher premium. Since the insurance company can’t determine the actual risk of that client, they rate for a higher risk.

What factors determine an insurance score?

1. Credit History

Insurance companies don’t just look at your actual credit score, they look at a variety of specific factors.

According to the National Association of Insurance Commissioners there are five areas of your credit profile that help insurance companies determine your risk:

  • Payment History- How well you have made payments on your outstanding debt in the past
  • Outstanding Debt- How much debt you currently have
  • Credit History Length- How long you have had a line of credit
  • Pursuit of New Credit- If you have applied for new lines of credit recently
  • Credit Mix- The types of credit you have

2. Insurance History

Most insurance carriers look at how long you’ve been with your previous insurance carrier when determining the rate for your policy. If you change insurance companies every year or every couple of years, that can negatively impact your insurance score.

When you stay with an insurance company for an average of 3-5 years, it can help your insurance score. There are some situations that warrant switching insurance carriers, even if it hasn’t been 3-5 years. But, staying put when possible is a great way to help your rates in the future.

For auto insurance, your current liability limits factor into your insurance score. Whether or not you’ve had continuous liability coverage can also have an impact.

If you have state minimum limits or if your coverage has lapsed, that has a negative impact. The higher your liability limits and the longer you’ve had continuous coverage, the better it reflects on your insurance score.

If you’re not sure if it’s time to switch or if you need to increase your liability coverage, call us today. We can review your insurance portfolio to see if your current policies are still the best fit for you.

3. Claim History

Many insurance companies won’t surcharge for claims under a certain dollar amount. But the number of claims you file has a significant impact on your insurance score.

Insurance carriers can only surcharge your policy for claims for up to 5 years. However, your claim frequency can factor into your insurance score for up to 7 years. While there are some claims that are unavoidable, it’s best to limit the number of small claims you file.

At Integrity First we have a Claims Specialist, Stephanie. We encourage all our clients to consult with her before filing any claims. She’ll review your policies and how a claim could impact your rates and insurability.

5 simple steps to improve your score:

1. Take care of your credit- Improving your credit can result in a better insurance score.

2. Stay loyal- The longer you stay with one insurance carrier, the more it will help your insurance score and your rates. 

3. Carry higher liability limits- Higher liability limits protect your assets and help your insurance score. A better insurance score provides lower premium. So higher liability coverage will lead to paying less money for more coverage.

4. Don’t file small claims- If you can avoid filing smaller claims, you’ll improve your insurance score.

5. Don’t let your insurance lapse– If you have a lapse in auto insurance, getting a new auto policy is significantly more expensive (sometimes nearly double the rate!). Keeping continuous insurance is important. Not only for your rate and insurance score, but you’re also required to have liability insurance to drive.

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