From the Other Side of the Desk: 8 Things Your Auto Insurer Knows About You
As with other insurance products, the pricing
of automobile insurance depends upon the risk that the insurer will have to pay
for damage to your vehicle or damage or injury to someone due to the operation
of a vehicle. Other losses may include theft and even natural disasters.
And insurance application will ask you about
where you live, your driving record, your vehicle and your household. In
reality, the auto insurer either knows or can readily obtain these facts
without asking you. Here are eight of the things your auto insurer knows or
will know about you.
Not surprisingly, your auto insurer can and
does access your driving history in each state where you have or had a driver’s
The driving record lists tickets for
violations such as speeding, disobeying stop signs and lights, impaired
driving, and unsafe or improper movements. Some of these tickets arise from
automobile crashes in which you were involved or are at fault. Your driving
history will also include crashes that have been reported to law enforcement or
the motor vehicle agency, even if you didn’t get cited.
Status of Your License
Using the driving record, your auto insurer
will know if you have your driver’s license. If it has been suspended or
revoked, the record will state that fact, the reason, and when the revocation
or suspension starts or ends.
Not all revocations or suspensions result
directly from the operation of a vehicle. For example, you might have one for
not showing up in court on a ticket or not paying off a ticket that otherwise
would not cause a loss of your license.
To that end, your auto insurer may even know
if you have failed to pay child support. In a number of states, failing to meet
your child support obligations constitutes a ground for license suspension or
revocation. For certain insurers, the faults in financial obligations such as
child support may reflect a risk that you will not pay your premium in a timely
Remember that your automobile insurance covers
more than the cost of defending an automobile crash lawsuit or paying out the
damages to an injured driver. You also have coverage for collisions or even
damage that results from something other than a collision. For instance,
comprehensive coverage may include a tree falling on the vehicle, someone
scratching it or a windshield crack from a flying rock.
With services such as the Comprehensive Loss
Underwriting Exchange (C.L.U.E.), an auto insurer will know your claims history.
This includes claims you have made with other insurance companies on your
A report that shows many claims on your auto
insurance tends to scare away auto insurance companies. This translate to
either higher rates, higher deductibles, or even the company’s refusal to
ensure you or the vehicle.
Your Credit History
By pulling your credit report, your automobile
insurance company will see how you handle credit and determine the chances that
you will default on premiums. This default risk represents one factor in your
overall insurance score.
Credit reports list a number of negative
events. Bankruptcies, foreclosures and judgments stand as the most prominent of
items that lower credit scores and credit-based insurance scores.
The insurer will also know details about your
handling of credit and finances that don’t reach the public domain. In this
category lie late payments to your credit card companies, lenders such as
mortgage companies and vehicle finance companies, utility companies and
landlords. You also get low credit-based insurance scores if delinquent
accounts fall into the hands of collection agencies.
Credit scores also take into account how much
you owe relative to credit limits (the credit utilization ratio), the age of
your credit accounts and your history of opening new credit. As such, our auto
insurer knows when you max out on one or multiple credit cards and whether
you’re opening new cards. These behaviors may signal to the insurer that you’re
relying too much on credit for monthly expenses or that you’re facing cash flow
or other financial problems.
How Much You Drive — And
Thanks to GPS and telemetric technology,
automobile insurance cantrack their
drivers. An attorney, whether representing the
injured person or the motorist alleged to have caused the injuries, will
request this information during lawsuit if one is filed.
Ostensibly, the offer of discounts leads
drivers to volunteer to be tracked and demonstrate their safe driving. Insurers
used negative data from the tracking to up premiums and deductibles or
otherwise take adverse action against their customers. As then, insurers
presently do not demand that their insured drivers be tracked.
If you volunteer for the tracking program,
your insurer can learn how many miles you drive in a particular period. If you
log around 12,000 to 13,000 miles per year, the insurer will treat you as a
“normal” driver. Above-normal usage normally leads (all other things equal) to
higher rates, while discounts may go to those who drive under the average. You
can see the logic: the more you drive, the greater your chances of being in a
The Way You Drive
Tracking also lets the insurer know whether
you’re speeding, disobeying red lights or making unsafe movements. These
“real-time” or recorded instances can cost you more in insurance, even if you
avoid tickets for these driving behaviors.
The device records your vehicle’s speed at
various locations. GPS determines the speed limit at those points. By
relatively simple comparisons of the information, the underwriter knows the
frequency and extent of your speeding. The tracking also detects the level of
lane-switching, a practice that ups the chances of a crash.
Where You Have Lived
Your prior residences also fall within the
realm of the insurers’ knowledge. Credit reports from the bureaus will list
your previous addresses for perhaps numerous years. This is due to public
records and addresses you have listed on insurance or credit applications, to
name a few sources.
Where you have lived help the insurance
companies verify whether you’re the person referenced in a particular credit,
claims or driving history report. Insurers also learn whether you have a stable
residence or finances. Numerous addresses in a short period of time may signal
that you’ve had trouble paying rent or finding a long-term residence.
Your Household and Other
You might consider only yourself the driver of
a vehicle and, as such, rely on your on clean record for favorable rates.
Yet, auto insurers may deem others in your
household potential drivers of the vehicle. The companies can learn who else
lives with you through cross-references of driver’s license databases, public
records such as criminal reports, and the like. With this information, the
insurance company is interested in finding those you have not listed who may
use your car and present a greater risk to the company.
When you apply for automobile insurance,
you’ll find it best to accurately answer the questions. The company already
knows or can get much of the information. Also, when you know what the insurer
knows or can know, you’ll appreciate better what goes into insurance
underwriting and how you can save money on premiums.