Insurance companies use insurance risk scores to determine whether or not they will issue insurance policies to consumers, the policy premiums, and how likely it is that consumers will file an insurance claim.
So, in sum, this score determines your insurance risk. Insurance companies have determined that past insurance claims are predictive of whether the consumer will file claims in the future, and for this reason they want to see what kind of risk consumers pose to them.
While credit report data is used to determine insurance risk scores, these scores aren’t calculated in the same way that a typical credit score is calculated. The important thing is to remember that both scores are based on your credit reports; you can assume that if you have a poor credit score then your insurance score probably will be on the lower end as well.
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