Middle aged man with glasses and short beard holding out a small yellow post note with text, "What's Your Score?"

The Effect Your Insurance Score May Have on Your N.C. Insurance Premium

North Carolina requires vehicle owners to carry at least the state-mandated minimum limits of liability auto insurance. However, finding affordable coverage might be more challenging than expected due to your insurance score. Before shopping for the best N.C. auto insurance rate, it’s important to understand how your insurance score can affect your premium.

What Is an Insurance Score vs. a Credit Score?

Many people confuse these two terms, but they have distinct meanings. Both can impact your N.C. insurance premium rates, but an insurance score predicts the likelihood of future claims or accidents, assigning a risk factor to you. In contrast, a credit score reflects your ability to pay bills or credit on time and maintain a low debt-to-credit ratio.

Higher Risk, Higher Premium

If you carry multiple credit cards with high balances, miss utility payments, default on loans, have a home repossessed, or file for bankruptcy, both your credit score and insurance score will suffer. N.C. insurance carriers consider your past financial behavior as an indicator of future risk. They use this information to decide whether to insure you and determine your premium amount.

Factors N.C. Insurance Carriers Use to Calculate Your Auto Insurance Rate

When shopping for auto insurance, you may think your premium depends only on factors like your car type or age. However, insurers consider much more. Here are some key factors that influence your insurance rate:

  • Auto Claim History: A history of frequent auto insurance claims signals a high risk of future claims, raising your premium.
  • Car Accident History: Multiple car accidents on your record increase your risk profile, leading to a higher premium. Traffic offenses, tickets, and collisions all negatively affect your rate.
  • Credit History: N.C. insurers review your credit score, any loan defaults, late bill payments, and the number and balances of your credit cards when calculating your premium.

While these factors impact your auto insurance rate, you can improve your insurance and credit scores to secure affordable N.C. auto insurance. Here are some steps you can take:

  • Create a budget to reduce credit card debt
  • Pay your bills on time
  • Limit credit card use to essential purchases

Paramount Insurance Agency is here to help you find the right N.C. auto insurance coverage that fits your budget. Contact us TODAY at 336-869-3335 with any questions about your N.C. auto insurance rate or how you can improve your insurance score.

Comments

comments