Why does my insurance cost more than my friend's? Here's what you need to know about Insurance Scores.

At Williamson Insurance & Investments, we regularly see a surprising trend: two drivers with nearly identical vehicles, driving records, and coverage needs can receive drastically different auto insurance quotes. What gives?

The answer often lies in something few people talk about: insurance scores.

What Is an Insurance Score?

An insurance score is a numerical rating used by insurance companies to predict how likely you are to file a claim. Among other factors, it’s heavily based on information from your credit history—not just your driving record. Insurers use it (along with other factors) to determine your risk level and, ultimately, your premium.

Think of it like a credit score, but with a slightly different purpose.

What Factors Influence an Insurance Score?

Each insurer uses its own proprietary model, but most insurance scores are built from key elements of your credit report, such as:

• Payment history (on-time vs. late payments)

• Outstanding debt

• Length of credit history

• Types of credit used

• Recent credit inquiries

Insurance companies have found that people with higher scores tend to file fewer and less costly claims, so a strong insurance score can lower your premium.

Why Two Similar Drivers Get Very Different Rates

Imagine two drivers:

• Both are 35 years old.

• Both have clean driving records.

• Both drive a 2020 Toyota Camry.

• Both live in the same ZIP code.

Yet Driver A pays $680 every 6 months, while Driver B pays $1,130.

Why? Driver A has a strong insurance score. Driver B’s credit report shows some late payments and high revolving debt. The difference in their rates comes down largely to how each person’s financial behavior affects their perceived insurance risk.

How to Improve Your Insurance Score

The good news? Insurance scores aren’t permanent. You can improve yours over time by practicing healthy credit habits:

1. Pay bills on time On-time payments are one of the biggest factors in your score. Set up autopay or reminders to avoid late payments.

2. Keep credit card balances low Try to use less than 30% of your available credit. High balances suggest financial stress, which raises risk.

3. Avoid unnecessary credit inquiries Opening new accounts frequently can hurt your score temporarily. Only apply for credit when you truly need it.

4. Build a longer credit history The longer your credit accounts have been open and in good standing, the better for your score.

5. Check your credit reports regularly Mistakes happen. You’re entitled to one free report per year from each major bureau at AnnualCreditReport.com.

What You Can Do Today

If your insurance rate seems higher than it should be, talk to us. As an independent agency, we shop multiple carriers and can explain your rate in plain terms. We’ll also work with you on long-term strategies to improve your insurance profile—and your wallet.