Simply put, auto insurance companies look at credit scores to help them assess a customers risk. In addition to the credit score, an insurance company looks at a customers insurance score, a number derived in part from the credit score. Some insurers offer no-credit-score car insurance, but these are fewer in number. Why auto insurers look at credit scores has the same answer as why banks look at credit scores before setting up a bank account: its complicated. Insurers believe there is a relationship between a drivers credit score and the amount of insurance claims they are likely to make. Auto insurance rates are thus affected.

Relationship between Credit Score and Claim History. Car insurance terms are more likely to be favorable if a customers credit history is spotless. From the insurers perspective, if the insured has never missed a payment, is always on time and has never defaulted or declared bankruptcy, they probably are not the type of person who gets into a lot of accidents and makes a lot of claims. It may sound like a stretch, but insurance companies spend a lot of money researching just these kinds of correlations to help them assess risk.

Have your documents readily available, including accident reports and medical statements. They will question you regarding your need for medical attention, past injuries, doctors opinions, etc., all with an eye to settling quickly and cheaply. Do not bother arguing; just have the facts in front of you. In addition to settlement for medical bills, there is the issue of pain and suffering. Again, an adjuster will always seek to question the nature of your injuries, hoping for the lowest possible settlement.

Auto insurance companies look at many factors when they determine who to insure. Credit scores are merely one of many variables, but they help them assess any risk that the insured may pose. Similar to how credit scores are derived, the precise equation involving credit score and insurability is not entirely known to the general public. Suffice to say that the better ones credit is, the more favorable the premium.

When dealing with auto insurance agents, have your facts plainly and exactly detailed, consider a lawyer, but most importantly, stand firm, do not panic and do not take the first settlement they offer because it will be lower than what is fair. After all, you pay for this service for just this type of eventuality.