What is an Insurance Score and How Does It Affect My Premium?

Most people realize that accidents, where you are determined to be at fault and tickets from traffic violations, increase the cost of your auto insurance. Likewise, an alarm system, impact glass windows for hurricane protection, or a new roof helps lower the cost of your Homeowners Insurance.

However, do you know the effect your insurance score will have on your insurance premiums?

Good luck in finding out. Information on your insurance score is kept in the vault next door to the formula for Coca Cola. Not really, but pretty close. Your insurance score is a product of the new world of Big Data. You know, the world where government, social media, and advertising people know if you eat prunes or dates for breakfast. I am not a conspiracy believer, but as a card-carrying cynic, I do feel my privacy is being invaded. I’m sure some of you have seen The Social Dilemma on Netflix.

Here is what we know and can share. An insurance score is not a credit score. Having an insurance score provided does not entail a hard credit hit. However, insurance scores do have credit considerations as part of the scoring calculation. Education level, occupation, time at your job, homeownership, length of time at your current residence, and marital status can all influence an insurance Score.

Insurance scores are fabricated— I mean, calculated by big data companies like Lexis Nexis, a statistical, number crunching, and Ouija Board utilizing firm in Boca Raton. Lexis Nexis considers virtually all information about insurance scores to be confidential and guards their programs like the Coke formula. 

So, what does this mean to you?

Insurance companies use insurance scores as a predictor of the likelihood that you will have a claim.

Score range from 1-10. 1 meaning you are filling out the claim paperwork as I type. 10 meaning you will take a space ride with Elon Musk before filing an insurance claim. Low scores increase premiums and high scores lower premiums. Insurance scores are considered confidential. As insurance agents, we are never provided knowledge of a client’s score. We simply know they make a difference in your premiums.

What can you do?

Just like your credit score, you are entitled to free information about your insurance score on an annual basis. We can’t promise that Lexis Nexis will share any secrets but you can request information regarding your insurance score. Just as mistakes are made, and can be corrected on credit scores, the same applies to insurance scoring. If you are interested in reducing insurance costs we suggest you consider taking action.

I’d tell you more but there are men with dark sunglasses in a black vehicle across the street. I think they are taking pictures of our building. I hope they are on our side.


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