Insurance risk indicator frequently asked questions
Risk assessments are used by insurance companies to determine the potential of the insured for future claims. These cover every kind of insurances, from homeowners insurance to auto insurance. Using these algorithms, insurance companies determine how much to charge each individual. Risk assessment criteria are developed using credit report information, as well as driver's records and accident reports, any insurance loss reports, and other information about insurance claims filed in the past.
Risk assessments come from different information, including credit reports from the three major reporting bureaus (TransUnion, Equifax, and CSC Credit Services). Information from these reports that insurance companies use to assess risks includes the length of your credit history and the score, the number of late payments on credit accounts, and any account in collections.
Risk assessments do not include personal information such as ethnic group marital status, religion, nationality, age, income, disability, or gender. These are considered protected information and cannot legally be used to determine the risk assessment of an insured person.
Yes, if you continue to build good credit over time, you'll be able to reduce your risk assessment score. Risk assessments are based on your credit score, so demonstrating that you can make payments on time and use credit responsibly will raise your credit score. Remember that you can also check your credit score for free one a year, or you may choose to check it more frequently by requesting a credit report.
Your insurance company is required by law to tell you if your risk assessment causes them to take adverse action. The Federal Fair Credit Reporting Act (FCRA) protects your rights as a consumer, as well as gives you the information needed to see if there are inaccuracies on your credit report.
You may report any errors on your credit report to the bureau that gave you the report. They will investigate and respond to your request. When your credit report is successfully updated, contact your local insurance agent and as them to re-order the risk assessment indicator. Any changes are typically applied to your premium afterward. You should review your credit report once a year to check for inaccuracies.
Many things go into your risk assessment. Your driving record, the number of insurance claims you've filed in the past, and your demographic information are all used to assess risk. Underwriters at insurance companies use these to get a picture of how likely it is that you'll be involved in an accident and therefore how risky it is to insure you. Your local insurance agent can help you with specific questions about our personal risk.
You probably know if you've revived multiple traffic violations, and each of these, as well as past accidents, all factor into making you a high-risk individual. Each insurance company has its own private algorithm that compiles these factors into a numerical score, determining how risky you are to insure. Your local insurance agent can talk to you about any concerns you have about your RAI and help you with specific questions.