Answer: 57%

13 leading insurers (from Value Penguin)

Questions

• Why do you think that auto insurers charge higher premiums for policyholders with lower credit scores? 
• Given the wide variance in auto insurance rates, does comparison shopping make sense? 
• Find the insurers with the three lowest premiums for poor credit. Then find the three lowest premiums for excellent credit. Are they the same there insurers?

Click here for the ready-to-go slides for this Question of the Day that you can use with your students. 

Behind the numbers (Value Penguin)

Credit scores can also be a key factor in determining your auto insurance quote. Insurance companies use a proprietary calculation — called a credit-based insurance score — to rate their customers. Policyholders with good credit scores tend to be offered lower car insurance premiums, while those with poor credit scores tend to be offered higher premiums, all else equal.

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Here's a great activity to pair with this question: COMPARE: Car Insurance Comparison Shopping

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.