Why Fleet Insurance Scores Are Important to Your Fleet

Auto insurance scores are not a common topic among fleets, largely because many fleets don’t understand how these scores can impact their business. In addition, many fleets confuse insurance scores with CSA scores. They’re related, and calculated using similar information, but they are different and have alternate impacts on your fleet. Considering all that fleet managers have to focus on, an insurance score may seem like a minor concern—but it shouldn’t be.

One of the most important tasks asked of a fleet manager is to reduce costs. Insurance costs can be great for fleets, especially those with a larger number of accidents, inspections, and poor credit history. Do all that you can to reduce your insurance costs by arming yourself with insurance score knowledge and tips to increase them.

What Is an Insurance Score?

An insurance score, or insurance credit score, is a rating that insurance companies use to determine the probability of a claim from the individual or company. It utilizes a statistical model to determine the values of these scores, assigning positives and negatives to details in your credit report. It’s very similar to an individual credit score in that regard. The difference is that insurance companies have their own scoring models and data. This model is focused more on the likelihood of an accident and claim.

The insurance score range is 200 to 997. The higher the score the better, and anything over 770 is favorable—much like a typical insurance score. A higher score results in lower insurance premiums. This is quite different from CSA scores, in which a lower score is better and results in lower premiums for fleet insurance.

How are Insurance Scores Calculated?

An auto insurance score is determined by a number of factors, your credit report being the main component. In essence, insurance companies use your credit reports to create scores like credit reporting agencies do. However, they have their own scoring method.

When calculating scores, insurance companies do not measure your ability to pay back a loan. Instead they replace that factor with the likelihood of a claim. They also may use some of the same data as reporting agencies, such as your total debt and the types of credit that a business has in use. Other factors and data that play into insurance score calculations include:

• Long established credit history
• Numerous open accounts in good standing
• No late payments
• No past due accounts
• Low use of available credit
• Collection accounts
• Driver behavior
• Local factors such as traffic congestion and weather conditions
• Historic accident risk

How To Look Up Insurance Scores

The metrics insurance companies use vary from state to state and each company has their own nuances when calculating scores. Therefore, it can be difficult to know your insurance score at any given time. However, you may be able to find these scores on traditional reporting sites such as Experian, Equifax, and even Credit Karma. TransUnion also has an easy-to-read section that specifically lists auto insurance scores. You can also use technological solutions, such as fleet management software, that integrates with your insurance plan. It not only monitors driver behavior to reduce instances that increase premiums, but it also creates individual driver scores and overall insurance risk scores.

Why are Insurance Scores Used to Calculate Premiums?

It might seem strange to consider credit reports when determining insurance premiums and risk of claim. This seems even more bizarre when you take into consideration the number of factors that play into accident risk: safety policies, maintenance, driving conditions, and driver behavior. While all of those factors (and more) are used to calculate premiums, there is a real and comprehensive reason insurance companies use insurance scores in their calculations. There are actuarial studies that prove the financial affairs of a company or individual are good indicators of claim risk.

The Difference Between CSA Scores and Insurance Scores

While insurance companies use both CSA scores and insurance scores to calculate premiums, they are two very different things. We’ve mentioned that insurance scores use your credit report and an algorithm determined by the insurance company. A CSA score isn’t based on your credit at all. In fact, it has much more to do with your driving and inspection history.

A CSA stands for compliance, safety, and accountability. A low CSA score means that your fleet has had fewer accidents, fewer inspection violations, and maintains vehicles to safety standards. This score plays into your ability to attract clients since they will use this score to determine whether or not they want to work with your company. It’s also used by the DOT (Department of Transportation) to determine whether or not your fleet needs to be monitored more closely. Insurance companies also use these scores to determine risk, but the score is not specifically designed for insurance uses.

When fleets work towards improving their fleet and driver safety, they do it for a number of reasons. It may be to reduce costs—either maintenance, insurance, or otherwise. It may be to reduce employee turnover and to help drivers feel safe on the job. It may be to improve CSA scores to help attract more customers and improve the company’s reputation. But it’s often not for the purposes of improving an insurance score. It’s a commonly overlooked factor in the calculation of insurance costs. Luckily, improving driver behavior, maintenance, and inspections can impact your insurance scores. However, if you’re forgetting to look into ways to improve your credit score, then you are surely missing an opportunity to reduce your insurance costs. If you are not focusing on your fleet insurance score, you’re not fully grasping all that your insurance takes into account.

How to Improve Your Fleet Insurance Score

Just like your credit score, your insurance score is not permanent. It’s a continuously updated score that considers multiple factors, which can be improved. This can largely be done by improving your credit report and includes:

• Reducing debt
• Paying bills on time
• Reducing credit utilization
• Increasing credit history

You should avoid maxing out your credit cards, and try to limit the number of insurance claims you file. Of course, doing so depends on your ability to increase safety and decrease accidents. Increasing your insurance score is about creating a good behavioral record on top of a good financial standing. To accomplish both, consider the following:

Get your credit report

The first thing you need to do is to get a copy of your credit reports from each reporting bureau. It’s recommended that you get a report from each rather than just one because one report may have different information. This is because certain companies report only to one or two credit bureaus and not the other(s). By checking your report, you can identify all of the negatives that are impacting your score. You’re able to get one free credit report each year, or you can use services such as Mint or Credit Karma to keep track of your reports throughout the year.

Certain negatives can be disputed and potentially removed from your credit report. Other disputes will impact your credit less with each passing month and eventually fall off of your record.

Take action

Knowing what’s on your credit report helps to identify what needs to be fixed and gives you a goal to work towards with specific actions to reach these goals. This may include ensuring payments are made on time, paying down credit, and reducing credit usage. You should also make behavioral changes like reducing speeding, hard braking, and other aggressive maneuvers. Insurance companies don’t just rely on your credit history to calculate scores, they use driving records as well. You can use telematics systems to monitor driver behavior and improve training and safety of your fleet.

Driver score

Implementing a driver score algorithm and integrating it with your insurance plan can help you lower insurance premiums. It calculates a daily driver score for each individual based on their driver behavior. These scores are compiled and averaged to create a risk score, which insurance companies use to calculate premiums. This has the potential for reducing your premiums by encouraging driver safety.

Learn more about insurance scoring, fleet tracking software, and asset tracking at Azuga.

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