New Jersey Lawyers - New Jersey attorneys
What is Insurance Scoring?
In 2003, the use of insurance scoring was introduced to New Jersey as yet another step in providing auto insurance consumers with more choices in companies, products and price.
Some auto insurance companies in New Jersey are now using your insurance score as one of the various factors to evaluate risks and assign rates. An insurer may use your insurance score, based on information contained in your consumer credit reports, in conjunction with your motor vehicle records, loss reports and application information to determine your insurance risk at a particular point in time.
In New Jersey, insurers are prohibited from using your insurance score to deny, cancel or non-renew coverage.
Remember...
While a credit score and an insurance score are both derived from information contained in your credit report, they predict very different things.
How much do you know about your credit history?
Your credit history plays a major role in many aspects of your life. How you manage credit is considered when you apply for home or auto loans, and when establishing utility, cable or telephone services. Few landlords will rent apartments or houses without ordering a credit report. It is sometimes considered even when applying for a job. Because the use of credit information is a fact of life today, it is important to understand and manage your credit wisely.
Why is insurance scoring being used?
A common practice in most states, insurance scoring, like other rating criteria, is a way for insurers to differentiate between insurance risks. Insurance scores are used by insurers to determine a consumer’s likelihood to file claims.
What is the difference between a credit score and an insurance score?
While a credit score and an insurance score are both derived from information contained in your credit report, they predict very different things. A credit score is used by banks and mortgage lenders to predict the likelihood that a person will repay a loan or some form of credit debt. An insurance score is used by insurance companies to predict a consumer’s likelihood to file claims.