You need auto insurance. You turn to a car insurance provider for a quote. The insurer pulls a credit report to determine if they should offer a policy to you. How will this change what you pay for your coverage?
The insurer is looking at risk indicators. Each insurer sets indicators of risk based on factors like your credit report. This information determines if they give you a policy. It can also impact how much you pay. Most people do not think about risk when obtaining a policy like this. However, it could impact the exact benefits offered by your coverage.
What Is a Risk Indicator? 
Insurance companies need to determine if a person is likely to file claims or be in accidents. Each auto insurance company establishes a risk indicator to do this. This is a type of code. It allows the company to determine how risky a policyholder is to them. If they are more risky, the insurer may charge more to cover these losses.
The risk indicator can apply to a variety of factors. In some cases, it will relate to previous claims you made. It might also include motor vehicle records. It may include any type of loss reports other insurers provide. It can also apply to information about the other forms of insurance you have and the claims you filed on them.
Why Do Risk Indicators Matter?
Companies build these codes based on data from thousands or even millions of data points. In short, they use information about you and drivers like you to determine what the future holds. Indicators can predict how likely a driver is to engage in these behaviors again in the future. As a result, the auto insurance company can place a higher rate on your policy or require you to pay in advance.
What Factors Are Not Part of a Risk Indicator?
Risk indicators cannot be discriminatory. They never include information such as ethnic groups, marital status, disability, gender, or nationality.
What Will These Indicators Look for Then?
Factors such as the length of time you have credit can be a concern. If you do not have an established history, this can state you have unproven financial skills. If you have late payments or collections, this indicates a high risk. There's a chance your policy might lapse. That's a risk to both you and the insurer.
Most people never learn about risk indicators. Auto insurance companies do not necessarily provide this information. Yet, they play a role in your car insurance access and costs.