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June 4, 2014 By Julian

What Does My Credit Rating Have To Do With Purchasing Insurance?

Misc_QuestionMarkSignCredit scores are based on an analysis of an individual’s credit history. Insurers often generate a numerical ranking based on a person’s credit history, known as an “insurance score,” when underwriting and setting the rates for insurance policies. Actuarial studies show that how a person manages his or her financial affairs, which is what an insurance score indicates, is a good predictor of insurance claims. Insurance scores are used to help insurers differentiate between lower and higher insurance risks and thus charge a premium equal to the risk they are assuming. Statistically, people who have a poor insurance score are more likely to file a claim.

Source: Insurance Information Institution. “What does my credit rating have to do with purchasing insurance?” http://www.iii.org. Accessed November 30, 2015. http://www.iii.org/articles/what-does-credit-rating-have-to-do-with-purchasing-insurance.html

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Filed Under: Personal, Theme 11

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