Insurance Scores (Everything You Need to Know)

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You’ve heard of a credit score before — but did you know that there’s a separate score attached to your name just for insurance purposes? Before you panic about another number you need to keep track of, take a deep breath. Insurance scores aren’t nearly as scary as they seem. As long as you have a decent credit score and a history of paying bills on time, there’s no need to worry. And even if you have less-than-stellar credit, there are still things you can do to boost your insurance score.

Understanding just what your insurance score is, how it’s used during the home insurance buying process, how it’s calculated and the steps you can take to improve it is crucial to your long-term financial health. And here at Hippo, getting your home (and your finances) to a place of total wellness is kind of our thing. Let’s dive in.

Key takeaways:

  • An insurance score is a numerical rating that helps providers know how much of a risk you’ll be to protect.
  • Your insurance score is calculated by considering several factors such as your credit score, your history of home insurance claims, your debt, your credit payment history, your insurance claim history, your location and even your age.

What is an insurance score?

An insurance score is a numerical rating that helps providers know how much of a risk you’ll be to protect. These scores are used in both the home, life and auto insurance industries (and their calculations are pretty much the same). They’re calculated by taking into account your credit score, credit history and insurance claim history. A higher score means you’re less of a risk in the eyes of insurance providers, and therefore you’ll likely receive a lower premium (and vice versa).

Why are home insurance scores important?

Home insurance scores are important because they help determine how much you’ll pay for coverage. It also helps determine if you’ll get coverage at all, as those with low scores may have issues getting protection or may be dropped from their providers altogether. And since the average cost of home insurance premiums is $1,200, even a small amount of savings each year can save you a lot of cash over time.

Home insurance scores are important because they help determine how much you’ll pay for coverage.

How are insurance scores calculated?

Your insurance score is calculated by taking into account several factors such as your credit score, history of home insurance claims, debt, credit payment history, insurance claim history, location and even age. While some of these factors carry more weight than others, together they provide insurance providers with a better understanding of how you’ll be as a customer. If you have a history of paying bills late or your credit history is small, you may face higher premiums until you can provide a string of on-time payments.

Home insurance scores and credit scores

Though they sound somewhat similar, home insurance and credit scores aren’t exactly the same. Credit scores reflect your financial history in total, including mortgages, car loans, credit cards and debt. They provide financial institutions with a better understanding of how you handle your finances before lending you money or approving a credit card application.

Home insurance scores are explicitly used for applying for home insurance, but they give mortgage lenders some similar information. Your home insurance score calculation includes your credit score, paired with other information like your insurance claim history and your credit report; your lender can determine how financially responsible you are.

Insurance score ranges

Insurance scores can range anywhere from 100 to 999, though the actual minimum and maximum values depend on the insurance company. Higher scores can lead to lower insurance premiums, while lower insurance scores will likely mean your insurance premiums will be a bit higher. Though most people find themselves in the 500–800 range, not every score is created equal.

What is a good insurance score?

Given that a good score can save you a lot of money on your home insurance premiums year to year, it’s imperative to understand what score can save you the most. As mentioned above, insurance scores can range from 100 to 999. Generally, a “good” insurance score is anything above 750. But if you find yourself with an average number (600–749) or below average (500–599), don’t fret. There are a lot of things you can do to improve your insurance score.

Generally, a “good” insurance score is anything above 750.

Tips to improve your home insurance score

You can determine your insurance score by checking with individual insurance providers since they all have slightly different ways of calculating this number. But generally, if you have a good credit score and pay your bills on time, you can expect to have a score that reflects that.

If you find your score is lower than you’d like because of past claims or a short credit history, you aren’t stuck. There are a variety of practices you can implement to boost that score over time, such as:

  • Paying your bills on time
  • Limiting the amount of credit card applications you submit within a short period of time
  • Minimizing your debt on current credit cards
  • Only filing a claim when it’s necessary (such as when the repairs cost much more than your deductible)
  • Not closing any currently open credit cards or bank accounts
  • Bringing variety into your open accounts, including loans, credit cards and traditional bank accounts

As a homeowner, there are many things outside of your control, such as liability factors and natural disasters. But what is in your control can still make a huge difference in your life, and that starts with taking financially responsible steps to get your insurance score up and your premiums down. Looking for a company that sees past the numbers and will back you up no matter what? Learn all about how easy it is to switch to Hippo from one of our specialists.