Do you need a business credit score to get business insurance?

With all the time, money, and energy you spend on your business, you probably want some backup. Business insurance can help protect your business when emergencies hit. 

Most businesses need general liability insurance plus coverage for commercial property, disasters, data breaches, workers' compensation, and other potential costs.

You probably have questions about getting business insurance. What type of insurance do you need? How much will you pay? What information do you need to apply?

Another question that comes up often: Do you need a business credit score to get business insurance? 

The short answer is no, it's not mandatory. A strong business credit score may help you get better commercial insurance rates and terms, though that’s not guaranteed. 

“Credit, or financial risk history, is often one of several factors considered when underwriting a business owner's policy,” says Gavin Mills, ARM, CPCU, director of casualty underwriting, in the commercial underwriting solutions department at Verisk. “Generally, stronger credit may be viewed positively and suggest a more stable risk profile; however, underwriting decisions typically may take into account a range of elements, including business operations, financial strength, and prior loss history.”

Do you need a business credit score for business insurance?

Your business can likely get many types of business insurance without a business credit history or business credit score. Most insurers don't require it as a condition of coverage.

Good credit scores may ultimately help a business get lower premiums, better payment terms (pay over time), higher coverage limits, or more flexible policy options.

Insurance companies may use a “credit-based insurance score” (CBIS) as part of the underwriting process. This type of score is based on information in credit databases, but instead of credit risk, it’s focused on insurance risk. 

Statistically, insurers have found that customers with good credit are less likely to file a costly claim. A strong business credit score can help signal that you or your business are less risky to insure. 

Commercial insurers may use credit-based insurance scores that take into account personal credit information (which is covered by the Fair Credit Reporting Act or FCRA) or business credit information (which is not covered by the FCRA). That’s important because disclosures apply to the use of personal credit that may not apply to the use of business information. 

Here’s an example of credit-based insurance scores from LexisNexis®: 

“LexisNexis® Attract™ for Commercial Scoring Suite helps develop a clearer view of commercial risks by offering access to multiple predictive loss models, including FCRA and non-FCRA options. These models incorporate scores for businesses, business owners and commercial drivers. While many carriers use commercial credit scores when underwriting, these scores and models are designed to help predict insurance risk, not financial risk.”

If you're just starting out and have not established a business credit history or business credit scores, insurers may look at other factors (including personal credit) to help them assess risk. 

While you may not be required to have a good business credit score to get insurance, building your business credit should be on your to-do list if you want to try to save money on insurance and financing in the long run. 

It’s important to note that unlike personal credit scores, business credit data used in CBIS is not protected under the Fair Credit Reporting Act (FCRA), which affects disclosure and dispute rights.

How your business credit score impacts insurance costs

Understanding what can drive policy costs can help you shop more effectively and potentially save money. Several factors may affect your business insurance rates.

“Financial strength of a business is one component of a broader risk evaluation process,” Mills explains. “Underwriters may also consider factors such as business operations, risk transfer and financing, property information, and prior loss history. 

“Insurance underwriting criteria and availability vary by insurer and jurisdiction. Each insurer applies its own criteria, so working with a knowledgeable agent can help present a more comprehensive view.”

Basic business factors

Your business industry (type of business), location, revenue and number of employees can all affect your insurance options. Insurers understand your risk profile.

Tip: Industry is often identified with an SIC or NAICS code. Check your business credit to make sure your reports accurately list this code for your business. 

The amount of coverage you need impacts cost. More coverage is more expensive. The value of your business property — including real estate, equipment, and furnishings — affect your premium calculations too.

How insurers may use credit-based insurance scores

Insurers may use business credit information in a way that’s similar to how lenders evaluate financing applications. They use credit data as a proxy for financial stability. 

Here's what happens behind the scenes: Companies that produce credit-based insurance scores analyze business data to predict risk. With credit data, they may evaluate payment patterns, outstanding debts, and overall credit health. 

This score works somewhat differently than a standard credit score. Insurers may use it to segment applicants into different rating tiers or risk pools. Think of these tiers as categories that determine your pricing level.

Businesses with high scores will often land in the most favorable tiers. That means they may qualify for the best discounts. For insurers, a strong credit profile often translates to a stable, low-risk customer who is less likely to file a claim.

Poor credit history often is associated with a higher predicted risk of future claims. The insurer prices the policy accordingly, which can result in higher premiums. The financial impact can be substantial — hundreds or even thousands of dollars in additional annual costs depending on the type of coverage and limits.

How credit affects coverage availability

Credit history doesn't just influence your premium. It may also affect whether you can get business insurance coverage at all.

With consumer insurance (personal auto or homeowner’s insurance), most states have laws preventing insurers from using credit as the sole reason for denying, canceling, or non-renewing personal insurance policies. 

Commercial insurance is less regulated. 

An extremely poor credit profile could become a major factor in an underwriter's decision to decline your application. Serious negative events like a history of late payments, recent bankruptcy, unresolved tax liens, or court judgments can raise red flags. An underwriter may conclude your business represents an unacceptable level of risk, regardless of other positive factors.

This doesn't mean you can't get insurance with credit challenges. But you may need to work harder to find carriers willing to cover you, and your business may pay higher premiums when you do.

What happens when you have no credit history

Many younger businesses — and even more established ones — may have what’s called a thin file. This is when a business hasn't established a meaningful credit history yet.

By law, an insurer cannot deny you consumer insurance solely because you lack a credit record. But, business insurance policies aren’t as closely regulated. If your business has a thin file, some companies may assign a neutral credit factor, which has no positive or negative impact on your premium. You pay the same rate as if credit weren't considered at all.

Other insurers assign a default score that results in higher premiums than a business with good credit history would pay. The rate typically isn't the highest possible, but it creates a financial disadvantage for businesses that haven't had the opportunity to build credit yet.

And still others may use a CBIS based on consumer credit information (FCRA-regulated data) when no business credit information is available. 

This is one reason starting to build business credit early can be helpful. Even if you don't need financing now, establishing a credit history may save you money on insurance and other business costs down the road.

How credit can affect your payment options

Your credit profile can also influence the payment terms insurers offer. An insurer may view a business with poor credit history as higher risk for non-payment of premiums.

As a result, they may be less willing to offer flexible payment plans like monthly installments. Instead, they may require a larger portion of the annual premium upfront; 25% or 50% as a down payment, for example, to secure the policy.

This can add to cash flow challenges for some businesses. Paying several thousand dollars upfront for insurance coverage may strain your working capital when you need it most.

Insurance companies often accept credit cards for payment. Consider paying with a business credit card that earns cash back or travel rewards, and paying off the full amount before the due date to avoid interest.

Need to pay over time? A 0% intro APR business credit card may help. Pay off the balance before the intro rate expires to avoid interest charges. 

The cycle struggling businesses face

Credit-related insurance pricing can create a difficult cycle for businesses facing financial hardship. Here's how it could unfold:

A company experiencing a revenue downturn struggles to make payments on time to creditors and their business credit scores drop. When insurance policies come up for renewal, the underwriting system flags the lower CBIS and premiums go up.

This new expense adds financial strain that can deepen the existing stress. Some businesses may even cut corners on safety or maintenance to save money, potentially leading to the very claims the credit score was designed to predict.

Understanding this dynamic helps you see why maintaining good credit health is so important, even when business is going well. Building a strong credit profile during good times can give your business more options and lower costs that may even help it ride out rough patches later.

Real-world impact on your rates

While savings vary by insurer and policy type, businesses with strong credit scores may see premium reductions, access to preferred pricing tiers, qualification for multi-policy discounts, and waived or reduced deductibles, in some cases.

The reverse is true for poor business credit, as this can trigger higher premiums across all policy types, required deposits before coverage begins, more frequent policy reviews, and limited coverage options.

With Nav, you can check and monitor your business credit. Nav’s business credit tools provide access to credit data from third-party sources such as Dun & Bradstreet, Equifax, and Experian, where available. Knowing where your credit stands before you shop for insurance helps you set realistic expectations and identify areas for improvement.

Nav Prime includes a tradeline that may be reported to select business credit bureaus. Reporting is not guaranteed to appear on every credit file.

What do you need to apply for business insurance?

Preparing to apply for business insurance is similar to preparing for financing applications. Having your information organized may help you save time.

Essential business information

Ideally it’s helpful to gather these details before you start the application:

• Legal business name and any DBAs
• Business structure (LLC, corporation, sole proprietorship)
• Federal tax ID (EIN) or Social Security number
• Physical business address
• Mailing address (if different)
• Years in business
• Number of employees
• Annual revenue
• Detailed description of business operations
• Industry classification codes

Revenue and payroll details

For certain types of insurance, you may need to provide detailed information about revenue and/or payroll. 

Insurers need accurate financial information. Be prepared to provide current year revenue projections, previous year's revenue, total annual payroll, breakdown of full-time versus part-time employees, and payroll by job classification for workers' comp.

Property and equipment information

If you're applying for commercial property insurance, you'll need building value if you own the property, value of equipment and furnishings, inventory value, property address and square footage, building construction type, and details about security systems and fire protection.

Required coverage specifications

If you need insurance for a lease or contract, know exactly what's required: minimum coverage amounts, required policy types, named insured requirements, additional insured requirements, and certificate of insurance deadlines.

Do your due diligence

Take time to shop for the right insurance agent or insurance company. Look for agents or insurers who have experience with businesses your size or industry, who can explain coverage options clearly, offer competitive quotes from multiple carriers, and provide responsive customer service.

Getting quotes from multiple agents or carriers helps you understand market rates. Don't just pick the cheapest option. Ask questions and make sure the coverage actually meets your needs.

Maintaining and improving your business credit for better insurance rates

Your business credit health can affect more than just insurance costs. It may impact your ability to get financing, secure payment terms with your suppliers (such as net-30 terms), and grow your business. Taking care of your credit can pay off in multiple ways.

Review your policy regularly

Set a reminder to review your business insurance policy annually. Your needs change as your business grows. You might need more coverage, or you might be paying for coverage you no longer need.

Consider shopping for new policies every three years. This ensures you're getting competitive rates and current coverage. Insurance markets change, and what was the best deal three years ago might not be true today.

When you shop around, your improved business credit score can help you qualify for better rates than you had before.

Build and maintain strong business credit

These practices can help you build credit health over time: 

1. Pay bills on time as payment history is a top factor in credit scoring models.
2. Keep credit utilization low on business credit cards, 
3. Establish tradelines with vendors and lenders that report to credit bureaus, 
4. Separate personal and business finances.
5. Monitor your business credit reports for errors and changes.
6. Dispute inaccuracies promptly.

Strong credit habits compound over time. Each on-time payment strengthens your profile and every responsible credit decision improves your standing with insurers and lenders.

Think of business credit as an investment in your company's future. The time you spend managing it can pay dividends down the road through lower costs and better opportunities.

Frequently asked questions

What types of business insurance are most affected by credit score requirements?

General liability insurance and commercial property insurance are the most common types of commercial insurance likely to take CBIS into account. 

Workers' comp insurance and professional liability insurance may also consider credit, though the impact varies by state and insurer. 

Some states limit or prohibit the use of credit information for certain types of insurance but those restrictions generally apply to consumer credit and personal insurance, not business credit or business insurance.

Can I get business insurance with bad personal credit?

Yes you can get business insurance with bad personal credit. According to Verisk’s Mills, “While poor credit and payment defaults can affect underwriting and pricing, coverage options are generally available through various markets, including standard and, in some cases, excess and surplus lines. Availability and terms depend on the insurer, state regulations, and the overall risk profile of the business.”

How often will insurance companies check my business credit score after I get a policy?

Most insurers check a CBIS at renewal time, typically once per year. Some may also check it if you request major policy changes or increase coverage limits. Regular policy reviews are standard industry practice, but insurers don’t usually check credit without a specific business reason.

What's the minimum business credit score needed to qualify for premium discounts?

There's no universal minimum score for premium discounts. Each insurer sets their own underwriting criteria. 

Generally, higher scores in any business credit scoring model improve your chances of better rates. Focus on building the strongest credit profile possible rather than aiming for a specific number.

Find out more: What’s the highest possible business credit score?

Can I appeal an insurance rate increase?

Yes, you can certainly try to appeal a rate increase. Contact your insurance agent or carrier to understand why your rates increased. 

If the increase relates to incorrect information in your business credit report, and you find mistakes, you can dispute those errors with the credit bureau. Provide documentation supporting your case. Your insurer may reconsider the rate if errors are corrected.

What happens to my insurance rates if my business credit score drops?

A drop in your business credit score may trigger a rate increase at your next renewal. The insurer may reassess your risk based on your current credit profile. If your score has declined significantly, they may require a larger deposit or adjust your coverage terms. Working to improve your score before renewal can help minimize rate impacts.

Are there insurance companies that don't consider credit scores at all?

Some insurance companies use CBIS less heavily in their underwriting, and some states restrict how insurers can use certain types of credit information. However, it is not unusual for major commercial insurers to incorporate credit data into their risk assessment. Shop around and ask insurers directly about their credit policies if this is a concern.

Can I get business insurance quotes without a hard credit inquiry?

Most business insurance quotes don't typically involve a hard credit inquiry. Hard inquiries are rare in insurance applications. Ask your agent about their credit check process if you're concerned about impacts to your credit score.