I JUST RECEIVED MY POLICY AND IT SAID THAT MY CREDIT SCORE AFFECTED MY PREMIUM. WHY?
An insurance score is different than a credit score.
- An insurance score is a credit-based statistical analysis of a consumer’s potential to file an insurance claim.
- Insurance scores help insurers better assess risk exposure and predict future losses.
- An insurance company only considers those items on a credit report that will indicate future loss potential.
- An insurance score considers primarily: outstanding debt, length of credit history, late payments, public records such as bankruptcies, judgments or liens, new applications for credit, types of credit used, available credit, and payment patterns.
- An insurance score does not take into account: income, race, gender, religion, marital status, national origin or geographic location.
- We recognize that people sometimes face difficult circumstances in their lives such as job loss, medical bills or divorce. When ERIE considers an applicant’s insurance score, an isolated instance of a late payment will not have a significant impact on eligibility. If there are several late payments because of a medical condition, it will not impact the consumer.
- Insurers look at long-term patterns and overall responsible use of credit when determining an individual’s insurance score. The use of insurance scoring is becoming more common in the insurance industry because of its proven reliability in predicting Policyholder’s loss experience.
- Insurance companies use insurance scores combined with other factors (such as years of driving experience) to properly classify an insured according to his/her potential risk.
- The information found through an insurance score has proven to be an effective predictor of insurance losses.
- Scores help streamline an insurer’s decision-making process, so policies can be issued more efficiently. By predicting the likelihood of future claims, insurers can better control risk, thereby enabling them to offer insurance coverage to more consumers at a fair cost.
- Many personal lines insurance companies have begun using some type of insurance score for assessing an applicant’s loss potential.
- Studies show that more than 92 percent of companies are using some form of insurance scoring, and that number continues to grow.
- The majority of insurers are using insurance scoring – but in different ways and for different purposes.