The best way to safeguard yourself from the financial damage that might arise because of an accident or any risk is insurance coverage. However, most people are usually not aware need insurance coverage. Insurance providers usually rely on insurance score to determine if an individual is a high risk to insure. Most people do not understand how insurance score is calculated. Apart from the determination, you should also know how you can lower your insurance rate. Here is a guide regarding your insurance score.
To begin with, you should know what an insurance score means. An insurance score is more or less similar to credit score as it dictates the likelihood of filing a claim for an accident or loss. Also, the amount of premiums that you will pay depends on your insurance credit score. Therefore, if you have a high insurance score, you will get to enjoy low premiums for homeowner’s, auto, and life insurance coverage.
Next, you should know how the insurance score is calculated. The figure is usually calculated using information from different databases. In most cases, information is usually obtained from Automated Property Loss Underwriting System (A-PLUS) and Comprehensive Loss Underwriting Exchange (CLUE). The figure usually lies between 200 and 997. An insurance is considered to have a good insurance score is the score is around 770 while below 500 is poor. Nonetheless, the figure is dependent on the policy that you intend to buy. For example, you will only get to enjoy low auto insurance premiums if the score is in the range of 700.
Apart from information obtained from the databases, some factors influence insurance score. The factors are usually used to tell the likelihood of an individual to file a claim for an accident. The first factor that goes into insurance score is stability or micro rating that is determined by your credit score, zip code, and infrastructure in your area. The other factors that determine your likelihood of filing a claim include the history of claims, insurance history, and driving habits. The auto insurance premiums are usually high for individuals who are known to commit traffic offenses. For that reason, you should maintain a clean driving record and also boost your credit rating. If you want to learn more about the difference between a credit score and insurance score, you should click here.
Insurance coverage is a good idea that should be embraced by all individuals. Nonetheless, you should know your risk before applying for any policy. If you have a low score, you should focus on improving it so that you can enjoy lower premiums. The likelihood of your claim being approved will be high if you maintain a high insurance score.