Car insurance for drivers with good credit

Best car insurance companies for drivers with good credit

We based our picks for the best car insurance for people with good credit based on average rates, available coverage, discount opportunities and third-party ratings for financial strength from AM Best and customer satisfaction from J.D. Power. If you have a good credit profile, these five companies might be worth considering:

How credit affects your car insurance

Your credit history can influence your car insurance rates in many states. When applying for a policy, car insurance companies often review your credit report to assess your financial responsibility. Generally, a more favorable credit history is linked to lower car insurance premiums, while drivers with less favorable credit histories may face higher rates.

Insurance companies typically perceive drivers with less favorable credit as higher risk. This perception stems from a correlation between credit history and the likelihood of filing claims, making late payments or defaulting on premiums. To balance this risk, insurers may charge higher rates to these drivers. It's worth noting that significant changes in your credit history during your policy period might influence your rate at renewal.

When considering what constitutes a good credit history for obtaining competitive car insurance rates, insurers often look for a history that aligns with the “good” range of credit ratings — between 670 and 739, according to the FICO scoring model. This is generally considered to be the baseline for competitive pricing.

However, it’s important to clarify that insurers don't use your credit rating directly. Instead, they use a credit-based insurance score, which incorporates your credit history among other factors, to determine your rates.

The table below illustrates the difference in average annual full coverage premiums for the different credit tiers.

Providers that don’t factor credit into your insurance rate

While most insurance providers consider your credit in determining car insurance rates, there are some carriers that may not factor in your credit history when you apply for a policy. This can be particularly beneficial for those seeking car insurance who are concerned about the impact of their credit on their premium. Here's a look at some insurance carriers that might not review your credit history as part of their policy application process:

• CURE Insurance
• Dillo Insurance
• Equity Insurance

Note that these insurance providers may not be available in all states.

Root Insurance is set to join the ranks of insurance providers that do not factor credit history into its rates. By 2025, Root plans to eliminate credit scores from its pricing model, focusing instead on driving behavior to determine premiums. This change aims to create a fairer insurance process, particularly for those who have been unfairly impacted by traditional credit-based pricing. As Root moves forward with this commitment, it will be another option for those seeking car insurance without the influence of credit history.

Further, in some states, it is against the law for insurance companies to use your credit rating to calculate your rate. Currently, insurance companies in California, Hawaii, Massachusetts and Michigan cannot use credit as a rating factor. But keep in mind that if you fail to make on-time payments, insurance companies in these states could still cancel your coverage.

What else impacts my insurance rate?

Your credit rating is only one factor that affects your car insurance premiums. Even if you have great credit, you might still pay an expensive rate based on other criteria. Here are some additional factors that could cause someone with good credit to have a high insurance rate:

• Age: Your age is one of the biggest factors to impact your insurance premium. Younger drivers tend to pay some of the highest rates because they lack experience. As you get older, your insurance rate will typically decrease, assuming you maintain good credit and a clean driving history. (Hawaii and Massachusetts ban the use of age as a rating factor, though.)
• Driving record: Drivers with a good credit rating but a lengthy history of insurance claims, at-fault accidents, tickets or DUI convictions are likely going to pay a higher rate. Maintaining a clean driving record can help you avoid expensive policy surcharges.
• Where you live: California, Hawaii, Massachusetts and Michigan ban the use of credit as a rating factor. This means that in those states, your credit will not affect your car insurance premium. Additionally, each state has its own set of insurance laws and regulations, which can impact average premiums.
• Coverage selections: The coverage selections and limits you choose are one of the biggest factors in your car insurance premium. Choosing higher limits and adding on optional coverage types like roadside assistance or rental reimbursement will generally result in higher premiums but will provide you with more financial protection.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze November 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

• $100,000 bodily injury liability per person
• $300,000 bodily injury liability per accident
• $50,000 property damage liability per accident
• $100,000 uninsured motorist bodily injury per person
• $300,000 uninsured motorist bodily injury per accident
• $500 collision deductible
• $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.

Credit-based insurance scores: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. Four states prohibit or limit the use of credit as a rating factor in determining auto insurance rates: California, Hawaii, Massachusetts and Michigan.