Dempsey Insurance Agency Blog

Do Credit Scores Affect Car Insurance Premiums in Massachusetts?

Patrick Dempsey May 16, 2018 11:38:26 AM

Many insurance companies consider drivers’ credit scores when calculating car insurance premiums. Drivers in Massachusetts, however, don’t have to worry as much about whether their credit score will directly affect their auto policy’s premiums.

Car Insurance in Massachusetts

Do Credit Scores Affect Car Insurance Premiums for Massachusetts Drivers?

47 States Let Insurers Consider Drivers’ Credit Scores

In 47 states, insurance companies can legally take drivers’ credit scores into account when calculating car insurance premiums. Insurance companies frequently don’t directly consider credit scores, but the scores have an indirect effect.

Instead of looking at credit scores, many insurers will check drivers’ “insurance scores.” Less well-known than credit scores, insurance scores operate similarly. They’re numerical scores that try to capture how much risk a driver exposes an insurance company to. The number is factored into equations when determining premiums, with drivers who have lower scores normally being assessed higher premiums.

Insurance scores are often based partly on credit scores, which is how credit scores can indirectly impact auto insurance premiums. Lower credit scores reduce insurance scores.

Although indirect, the impact that credit scores ultimately have on auto insurance premiums can be substantial. Drivers who have low credit scores and live in these states frequently end up paying significantly more for their auto policies.

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Research Backs Up This Practice

Basing drivers’ auto insurance premiums on their credit scores may sound unfair, but it’s permitted in most states because there’s research that supports the practice. The University of Texas conducted a study that shows drivers who have low credit scores tend to have higher claims payouts and more insurance losses than drivers whose credit scores are high. The findings were corroborated by another study, which was done by the Federal Trade Commission.

Car Insurance in Massachusetts

Massachusetts Doesn’t Let Insurers Consider Credit Scores

Massachusetts, California and Hawaii are the three states that don’t fall into the above group of 47. Each of these states has passed legislation prohibiting the practice of using credit scores to determine drivers’ auto insurance premiums.

Since state law prevents insurance companies from considering credit scores, drivers in the state generally don’t have to worry about whether their credit score will increase their auto policy’s premiums. Obviously, this is good news for drivers with poor credit who might otherwise pay higher premiums. 

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Auto Insurance Premiums Are Still Affected by Other Factors

Even though insurers in the state don’t normally consider drivers’ credit scores when setting premiums, there are plenty of other factors that do impact how much drivers pay for auto insurance. Some of the factors that can affect how much drivers pay include the:

  • Age, gender and marital status of a policy’s primary driver

  • Year, make and model of the insured vehicle

  • Number of miles the policyholder drives annually

  • Primary driver’s past driving record

  • Coverages and limits selected

Of course, there are also several discounts that drivers may be able to use to lower their premiums. Depending on what discounts an insurer offers, drivers might be able to take advantage of multi-policy, pay-in-full, accident-free, student or other discounts.

Compare Car Insurance Policies with an Independent Agent

Because there are still so many factors that can influence how much your car insurance costs, it’s wise to get quotes from several insurance companies in Massachusetts. For help quickly obtaining and comparing quotes on auto policies, contact the independent agents at Dempsey Insurance. Our agents are able to look up quotes from many insurers, and they have the expertise needed to compare both coverages and rates so that you get the best possible policy.

Topics: Car Insurance

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