Does my credit rating have any effect on my auto insurance premiums?

By Jacques Wong | Last updated: May 17, 2017

There are many things that play a role in determining your car insurance premiums and some factors vary by company and jurisdiction. However, in general, your car insurance premiums are affected by five main factors:

  1. Rate Class – The intended use of the vehicle is a huge risk factor. Someone using the car for the occasional grocery run would have a much lower loss exposure (risk) than someone using it for business.
  2. Territory of Operation – Some areas are higher risk than others or carry higher litigation costs.
  3. Claims Record – Someone with a higher number of recent claims would be considered a riskier driver and so will have to pay a higher premium.
  4. Make/Model/Year – These all have an effect on premiums based on the cost to repair and the loss statistics for that vehicle.
  5. Coverages – More comprehensive coverages or limits will require the insured to pay a higher premium.

So, as you can see, your credit rating isn't looked at during the rating process. The only way your credit rating could influence your car insurance premiums would be when you are financing your premiums and paying monthly rather than a lump sum, since you may be paying a higher interest rate if you have a sub-par credit score (learn more in Your Credit Score and Your Insurance Premium).

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Written by Jacques Wong

Profile Picture of Jacques Wong

Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.

In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.

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