Whether you are a veteran with multiple cars and a good experience with car insurance policies, or you are green when it comes to auto insurance, both would require you to give all the important details about your driving record when buying auto insurance policies.
Whenever you are looking for car insurance quotes, insurers want to get all the details about your driving record. It is usually included in a consent form which states that you are allowing the insurance company to access your records.
But the question might have popped into your head; how do auto insurance companies check driving records? This article will answer the question, along with everything related to it. We’ll look into what’s a CLUE report, reasons why your driving record is checked, and ways you can save money on car insurance.
How Insurance Companies Check Driving Records
Whenever you are on the internet looking for great car insurance policies, or just visiting the insurer’s office, you’ll always be asked about your driving record. But no one has a file cabinet filled with all the information about their driving, including all the tickets they have received.
If you do not know, you’d be surprised and intrigued to know that every little detail about your driving record is stored in a report. This report contains all the tickets, traffic violations, etc.
Auto insurance companies get this record either directly from the policyholder’s DMV. But with the coming of the internet, driving records are usually accessed via LexisNexis. LexisNexis is a data analytics company that makes it available for companies to access public records digitally.
You can even access your driving record either via the DMV or just by requesting a copy through LexisNexis to see how many tickets you have collected. But that’s not all car insurance companies access when deciding your insurance rates.
What’s a CLUE Report
Auto insurance companies require more than your driving record to determine your insurance rates. The other important record these companies check is your past insurance claims. No matter how small the accident was, if you made an insurance claim, it will be registered, for about 7 years depending on the state you live in.
Car insurance companies get your past insurance claims details in your CLUE report. The CLUE report (stands for Comprehensive Loss Underwriting Exchange) is a summary of all your past insurance claims for about five or seven years and it details all the important things needed by the insurers to determine your insurance quote.
Why Driving Record is Checked
So why are your driving record and past insurance claims considered and checked thoroughly before deciding insurance rates? Insurance companies, not just car insurance companies, need to assess and manage risk to prevent losses.
When someone buys a car insurance policy, they are putting their risk under the insurer’s responsibility. If they get in a car accident, the insurance company will have to pay for the costs of the accident, which can go as high as a million dollars.
Auto insurance companies evaluate all the risks using not just driving records and past insurance claims, but other factors such as age, gender, location, make and model of the car, credit score, etc. All these factors are indicative of the risk associated with the policyholder.
So if a person has a poor driving record and a history of making insurance claims, it is very likely that they will get in another car accident and make an insurance claim. This makes them high-risk individuals and insurers charge more for the same policy. A person with a poor driving record will pay more than someone with a clean driving record.
How to Save Money
Apart from the obvious way of making sure that you drive carefully, avoid getting tickets and accidents, and maintain a clean driving record, there are some other ways you can save money on car insurance policies. For example, what if you already have a bad driving record?
Let’s say that you have had a few accidents, and tickets, and made insurance claims in the past. The hope of you getting great car insurance policies at an affordable price is not dead yet. While you’ll have to pay a bit more than people with a clean driving record, you can still save some dollars.
The impact of traffic violations is different for different auto insurance companies. For example, some companies might charge you 20% more for speeding, while other companies will only hike the rates by 5%, which is comparably a slap on the wrist.
So before you buy any auto insurance policy, do the proper research, especially based on your state. Different states, different auto insurance rates. For example, if you are a resident of Wisconsin, then look for the best Wisconsin car insurance company to ensure you get great auto insurance at affordable rates.
Compare all the quotes from different companies and what coverage they are offering. Finally choose the one that has the best of both worlds; great coverage, great price.
Make Fewer Insurance Claims
Another important thing that people need to follow is making lesser car insurance claims. While it is advised to maintain a good driving record by avoiding tickets and getting in car accidents. But insurance companies also consider past insurance claims.
Consider this; you get in a car accident with another car or you drive into a light pole. Claiming someone else’s liability insurance is perfectly okay, but if you claim your collision insurance, your insurance rates would shoot up.
You’ll also have to pay the deductible rates. So if fixing the damage is not too expensive, you should get it done yourself. Paying $200-$300 from your pockets is better than paying inflated car insurance rates for at least 5 years.
So that was everything you needed to know about why and how auto insurance companies check driving records.