When you approach an insurance company to get a Central Florida Auto Insurance Policy quote, you’ll be asked to provide a copy of your driver’s license, your social security number, and information about the year, make, and model of the vehicle(s) that will be covered by the policy. You’ll also be asked to provide financial information that the company will use to review your credit score. How does your credit score affect your auto insurance policy? Read on to learn!
How Your Credit Score Affects A New Policy
As you may have guessed, the higher your credit score is the lower your premium will be in most cases. Conversely, if your credit score isn’t great you’ll probably pay more for your auto insurance policy: in some cases, more than twice as much as those with outstanding credit histories. Why? Insurers assert that consumers with lower credit scores submit more claims than those with excellent credit. In short, insuring a driver with bad credit is riskier for an insurance company. The Federal Trade Commission conducted an analysis of the correlation between credit history and auto insurance claim frequency and dollar amount. Their conclusions back up the insurance industry stance that policyholders with lower credit scores cost insurers more to cover.
How Your Credit Score Affects Your Policy at Renewal Time
The correlation between credit score and insurance rates at renewal time isn’t as straightforward. Florida is one of 15 states that require insurance companies to recalculate policyholders’ credit scores every three years before setting rates. Depending on whether your credit score has improved or worsened during this time frame, you can expect your premium to increase or decrease. If your credit score has plummeted, an insurer could potentially decline to renew your policy. If your credit score was less than stellar when you secured your car insurance policy, you have an opportunity to save money by improving your score. Not only might you be rewarded with a lower auto insurance premium, but you’ll find it easier to secure loans and credit cards once you raise your credit score.
If you have questions about your existing auto insurance policy or are in the market for a new policy, contact us at Newman Crane & Associates Insurance, (407) 859-3691. Excellent credit or not, we will work to get you the most competitive rate.