One of the biggest factors in determining your auto insurance rate is your credit history. Insurance companies will do a "soft pull" on your credit, meaning they will get some of your basic information, but you won't be penalized on your credit score for applying.
The reason your social security number, and your credit history, is used by the insurance companies is because if you are careful with your credit and paying of your bills, you are deemed to be more responsible, and therefore are probably a better driver.
Branch Owner, TWFG Insurance Services, Fremont California and the Greater Bay Area Representing Dozens of Insurance Carriers
Credit is a rating factor in 48 of the 50 states. Only California and Virginia do not use credit score as a rating factor. In credit states you may get by without giving your social security number but you will also end up with the highest rate. If you can't buy a cell phone without giving your SS# why would you not give your SS# on your auto insurance?
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The reason your social security number, and your credit history, is used by the insurance companies is because if you are careful with your credit and paying of your bills, you are deemed to be more responsible, and therefore are probably a better driver.