Doesn’t it seem queer when your insurance company asks your credit score to determine your premiums? After all, you aren’t taking a loan or getting into any kind of financial liability with a lender.
Like many car owners, you might be wondering, “does your credit score affect car insurance in Ontario?”. In Ontario, it’s illegal for insurance companies to use your credit as a factor of your risk profile. Thus, your credit score won’t affect your insurance premiums in Ontario.
However, it pays to understand the correlation between your credit score and insurance premiums. After learning the answer to the question, “does your credit score affect car insurance in Ontario?”, you can visit this website to obtain multiple quotes from top insurers. Reputed insurance brokers can help you find suitable policies.
Why Do Insurers Want to Know Your Credit Score?
Your credit score reflects your financial responsibility and money-handling habits. According to insurers, a correlation exists between their credit and risk profile. Clients with a high score apparently tend to pose a low risk to insurers since they are financially more responsible. Besides, these customers are financially resilient, which deters them from filing claims too frequently.
Moreover, their responsible money-handling habits prompt them to renew their policies on time. With the risk of lapsed car insurance policies gone, these clients would be deemed as low-risk car owners. So, car owners wondering, “does credit score affect car insurance?”, may try to maintain decent creditworthiness.
Insurance companies check out the following aspects of your credit history while deciding premiums.
- The number of late payments and your payment record
- The number of credit accounts and loans you have
- Your available credit limit and the percentage of credit you used
- The total debt you are currently having on your records
However, there’s no established formula based on which your insurer would determine your premiums after knowing your credit score. In general, it is believed that car owners with higher credit scores would qualify for lower premiums due to better creditworthiness.
In Which Provinces Can Insurers Check Your Credit Score?
Car owners wondering “does credit score affect car insurance in Canada?”, would like to know the provincial legalities regarding insurers checking their creditworthiness.
- Insurers in Ontario, Labrador, and Newfoundland are not supposed to use credit scores while determining their premiums.
- Similar conditions prevail In Nova Scotia, and insurers cannot deny policies if you refuse to furnish your credit score.
- In some provinces like Alberta, insurance companies should seek the consent of car owners before checking their credit scores. In case you want to settle for the basic plan, they don’t have the right to check the score.
- The provincial government takes care of car insurance in British Columbia and Manitoba. Neither the Insurance Corporation of British Columbia (ICBC) nor the Manitoba Public Insurance (MPI) checks the credit scores of car owners while calculating their premiums.
- Drivers in Saskatchewan need to get basic coverage through Saskatchewan Government Insurance (SGI). However, if you approach a private insurer for optional coverages, they might check your credit score.
- In Prince Edward Island and Quebec, there’s no specific rule prohibiting an insurer from checking your score.
How Do Insurance Companies Obtain Your Credit Scores?
Even if you refuse to disclose your credit score to your insurer, they might find out your creditworthiness. In Canada, TransUnion and Equifax are the two prime credit bureaus. Both of these are private companies and collect data about your money-handling habits.
So, if an insurance company requests you to grant permission to check your credit report, they would peek into the record that these companies have prepared. In Saskatchewan, Prince Edward Island, and Nova Scotia, insurers are supposed to inform you when they access your credit report.
Is it Possible to Get Insurance Coverage with a Poor Credit Score?
Regardless of your creditworthiness, insurance companies in Ontario should cover your car. The Insurance Bureau of Canada (IBC) has come up with its Voluntary Code of Conduct. This code prohibits insurers from denying or cancelling benefits on the ground of poor credit scores.
While insurance companies don’t have the right to deny coverage, some insurers might use your poor credit score as a ground to charge a higher premium. If you feel that your current insurer is charging higher premiums, talk to a reputed insurance broker. The professionals will recommend a more affordable policy with similar benefits and coverage to you.
Here are some measures that can help you save on your policy.
- Increasing your deductible reduces your risk profile, thereby qualifying for your lower premiums
- Maintaining a clean driving record can directly curtail your insurance rates
- Reviewing your policy with a broker can help you remove unnecessary coverages
- Bundling policies and banking on multi-policy discounts can also work for you
- Most importantly, shop around while you look for affordable auto insurance policies
Does Your Car Insurance Policy Influence Your Credit Score?
Well, many Canadians reach out to brokers, asking, “does car insurance affect your credit score?”
In general, paying premiums after purchasing an insurance policy won’t affect your credit score. Neither would it help in building a good credit record. However, failing to renew your insurance policy on time or missing out on a premium payment may result in an adverse impact on your score. Your insurance company may send your account to a collection agency, which implies that your credit report can take a blow.
Endnote
By now, you have got an unambiguous answer to your question, “does your credit score affect car insurance in Ontario?”
Your credit score has little or negligible impact on your premiums. Rather, focus on other determinants of your insurance rates, like your driving record, demerit points, demographics, and the type of vehicle you own. With professional support, you can qualify for lower premiums with top car insurers in Ontario. Consult a reputed insurance broker to save on your premiums.