Do Insurance Companies Check Driving Records?

Insurance Q&A: “Do insurance companies check driving records?”

Well, some do…and some don’t. The answer depends on the risk profile of the insurance company you most closely match up with or perhaps the one you decide to apply to. Every time an insurance company runs you CLUE and MVR reports, they have to pay. So they’re not likely to do it unless you give them a reason such as switching insurance plans, not paying your insurance premiums, or if they get a request for proof of insurance from the state.

Whether you’re buying insurance for the first time or switching, it’s a safe bet your driving record will be ordered as part of the underwriting and pricing review for your insurance policy.

The companies that don’t regularly order driving records probably won’t tell you, as they hope you’ll fess up about the tickets and accidents you’ve had. Conversely, they may just charge the average insured more to make up the difference.

That way they won’t have to pony up the money to pay for the reports, which can cost between $1 and $7 each. But they’re balancing out their risk if you don’t actually have a clean driving record.

It may not sound like much, but if a company is paying for thousands of these driving reports on a daily basis, with no guarantee of issuing an actual policy, it can add up quickly! If they’re running reports to renew policies only to charge the same premium or drive customers to get quotes elsewhere due to rising premiums, it could also cost them more in the long run than they actually get back.

You might be able to fib about your driving history to lock in a lower rate. Keep in mind, the company can run your CLUE and MVR at any time. If the company decides to review your records after the policy is issued, they may raise your insurance premium mid-term or go as far as to drop you or not renew your policy. In extreme cases, you could even face criminal penalties.

So it’s generally not smart to go that route in the hope of getting cheaper car insurance.

What do driving records reveal about you?

A Motor Vehicle Record (MVR) details your tickets and accidents, while a C.L.U.E report documents your claims history.

Insurers also review Motor Vehicle History reports.

Typically, your driving history is reviewed as far back as five years for standard and preferred insurers and three years for non-standard companies.

How do insurance companies use your driving records?

For underwriting purposes, you driving record, comprised of your MVR and/or C.L.U.E. report, may be checked to determine if you are an eligible candidate for their program. It’s not the only factor in determining your insurance premiums, but it can play a significant role.

Standard and preferred insurance companies may not offer a policy to a driver who exceeds their acceptable underwriting guidelines based on driving record alone. If you have a clean driving record, insurance rates can still be higher due to factors like age, credit score, and other things that are not related to a traffic violation.

On the other hand, non-standard insurers may allow any number of tickets and/or accidents for a driver (or household), but will charge accordingly. Some companies specialize in high risk auto insurance or cater to specific groups such as those with international drivers licenses. This type of auto insurance company may also charge their average driver a higher premium.

Their “appetite” is much broader than that of the standard and preferred carriers. These insurers are much more comfortable with below average driving records.

The other purpose of the driving record review is to determine how much money to charge you for insurance. It’s a big part of how car insurance rates are determined.

Put simply, the more tickets, accidents and insurance claims you have on your record, the more you can expect to pay.

It should make perfect sense, but it also helps to understand how insurance companies make money to better understand the pricing of your insurance policy.

Read more: Do insurance companies check credit?

What if I can’t obtain insurance because of a poor driving record?

No matter how bad your driving record is, you can find a company willing to insure you as long as you have a valid drivers license. More traffic infractions or claims will drive up your rates though to the point of being restrictive. If you can’t find affordable insurance, you can still obtain insurance via an assigned risk program depending on your state.

Assigned risk programs are usually state-run insurance programs that will insure any driver. These programs are necessary mostly because car insurance is mandatory in nearly all states. They assign a certain policy rate limit for state minimum liability insurance. Then they assign each applicant to an insurance company rotating around.

After all, it wouldn’t make sense for a state to force you to have insurance, but not provide an option for you to purchase it.

Similar to credit reports, driving records aren’t error free by any stretch. So be sure to ask for the results to verify you are charged accordingly.

Tip: Be sure to shop around with an independent insurance agent, as your current company may be charging you for a ticket received as far back as five years ago, while others only look back three years.

(photo: specialkrb)