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.
But 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 – that way they won’t have to pony up the money to pay for the reports, which can cost between $1 and $7 each.
It may not sound like much, but if a company is paying for thousands of reports on a daily basis, with no guarantee of issuing a policy, it can add up quickly!
And while you might be able to fib about your driving history to lock in a lower rate, 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.
What do the 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. For example, standard and preferred insurance companies may not offer a policy to a driver who exceeds their acceptable underwriting guidelines.
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. 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.
What if I can’t obtain insurance because of a poor driving record?
If you are deemed uninsurable by even the most lenient of insurance companies as a result of your driving records, you can still obtain insurance via an assigned risk program.
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.
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.
In order to qualify for such a program, you must typically demonstrate that you have attempted to get insurance in the regular marketplace, but have been turned down by at least two non-standard companies (excess and surplus lines insurance).
This type of insurance is not designed for those who cannot AFFORD a policy from a non-standard company, but rather for those who have been denied coverage. And yes, you can expect to pay a very high premium for this type of car insurance.
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.