How Your Business Credit Score Influences Your Insurance Premiums

Did you know that your credit score can affect your commercial insurance rates? Your business credit score is more than a number on a report—it’s a window into your company’s financial responsibility. In Canada, many insurers consider this score when underwriting and pricing commercial insurance policies. Understanding how and why your credit score matters can help you secure better coverage at more competitive rates.

What Is a Business Credit Score?

A business credit score is a three-digit number reflecting your company’s history of managing debt and financial obligations. Major credit bureaus—Equifax, TransUnion, and Dun & Bradstreet—compile these scores based on factors such as:

Payment history: Timeliness of paying invoices, loans, and lines of credit
Debt levels: Amount of outstanding debt relative to credit limits
Length of credit history: How long your business has maintained credit accounts
New credit inquiries: Frequency of recent credit applications

A strong credit score signals to insurers (and lenders) that your business is financially stable and less likely to default on premiums or file frequent claims.

Why Insurers Use Credit Scores

Insurers rely on statistical correlations to predict risk. Research shows that businesses with lower credit scores tend to file more claims and face higher incidences of late premium payments, both of which translate to increased costs for insurers. Conversely, a solid credit history often indicates prudent financial management and fewer claims, enabling insurers to offer more favorable premium rates

The Credit-Consent Discount

Many Canadian insurers will ask for your permission to perform a “soft” credit check on your business credit file, your personal credit file, or a combination of both. This inquiry doesn’t show up on your reports and won’t affect your score. By consenting, you could earn a discount on your premium of up to 25%. If you decline, the insurer may view you as higher risk and charge a higher rate, but they can’t outright refuse to quote you solely for that reason.

Tips to Improve Your Business Credit Score

Enhancing your credit profile not only benefits loan approvals but can also lead to lower commercial insurance premiums. Consider these best practices:

Pay bills punctually
Automate payments for loans, lines of credit, and trade invoices to avoid late fees and missed payments.
Keep credit utilization under 30%
Aim to use less than 30% of your available credit at any given time. A utilization ratio well below this threshold demonstrates fiscal restraint and can boost your score
Maintain long-standing credit accounts
Older accounts contribute to a longer credit history. Avoid closing paid-off cards or lines, as doing so can shorten your average account age.
Minimize hard inquiries
Space out applications for new credit facilities. Too many “hard pulls” within a short period can signal financial distress and temporarily dent your score.

Partner with a Licensed Montreal Commercial Insurance Broker

Navigating the nuances of credit-based underwriting can be complex. At Assurances Simon, our experienced brokers guide you through every step—evaluating your risk profile, securing consent for credit checks, and negotiating the most competitive premiums tailored to your business needs.

Ready to optimize your commercial insurance rates?
Reach out to Assurances Simon today for a complimentary risk review and find out how your credit score can work in your favour.