The exact method used by insurance companies to calculate insurance scores is top-secret. Insurance companies seek to use their understanding of risk as a competitive advantage over other insurance companies. Not all insurance companies calculate insurance scores the same way. The factors used may be gathered from a variety of sources. However, each company must file what factors they consider in their risk analysis with each state's department of insurance. This filing allows consumers some insight into how they will be assessed by different companies.

Your insurance company considers a variety of factors in determining your insurance score. These factors are often drawn from multiple sources. These sources include the state driver's history report, insurance claim records, credit reports, and insurance application. In auto insurance, credit score now factors into most companies calculation of risk. In some states, use of the credit report in calculating risk is not allowed, but the credit score is used to determine what payment arrangements the insurance company offers. Although many insurance companies now use credit history in determining risk, your driving record and claim history still carry the most weight. Insurance companies usually look back, as far as five years, at personal information about your driving record and claims. Finally, most insurance company algorithms factor in demographic data. This demographic data is collected on your policy application and includes factors such as age, sex, zip code, marital status, and if you have children.