Owning and operating a vehicle means you must carry liability auto insurance on that vehicle, as mandated by the state of North Carolina. However, when you are looking for an affordable insurance premium, you may be surprised to find your insurance quote is higher than expected, only to find out the reason is due to your insurance score. Find out what an insurance score means and how it may affect your insurance rate.
An Insurance Score is a score designed to predict the likelihood of future accidents or claims filed based upon your credit report. You may hear the terms “insurance” score and “credit” score used similarly since they both impact your insurance rate; however they do mean different things. While your credit score signifies how predictable you are in paying your bills on time and/or keeping your balances down, your insurance score reflects the likelihood of your having an accident or filing an insurance claim.
Using Data to Predict Your Insurance Rate
You may not think having multiple credit cards or keeping high balances on credit cards has anything to do with your insurance rate, but think again. There are multiple variables that your insurance carrier considers when determining what kind of risk you will be. The higher the predicted risk, the higher your insurance rate will be. Below are some factors used by N.C. insurance carriers to determine your insurance rate:
Credit Information (credit score, past due payments, defaulting on loans, bankruptcy, etc.)
Accident History- The past is the biggest indicator of the future. Having a history of multiple car accidents is a good indicator that future accidents will occur.
Insurance Claim History- Having a history of multiple insurance claims does impact your insurance rate negatively.
Car insurers use the above information to decide if they want to accept the risk posed by you. Your insurance score is informative of the type of customer you will be, the likelihood of you being involved in an accident, the predictability of you filing an insurance claim, and whether you will pay your insurance rates in a timely manner.
Tips to Improve Your Insurance Score
It’s never too late to work towards improving your insurance score and here are some helpful tips:
- Pay your bills/loans on time- this will promote a positive credit history
- Avoid multiple credit applications- surviving on too much credit does not look favorable
- Pay down your current debt- review your total credit extended to you by credit card companies and work towards reducing it
- Do not close unused credit cards- closing an unused credit card account may reduce your credit limit so keep them open despite not using them
Keep in mind that favorable credit information and insurance scores result in lower insurance rates.
Paramount Insurance Agency understands your need for the right type of auto insurance protection at an affordable rate. Contact us at 866-869-3335 with any questions regarding your N.C. auto insurance premium or your insurance score and how you can get the best rate for your budget.