Data Sources Auto Insurers Use to Collect Information About You

Insurance companies might collect the following information when you apply for an auto policy.

1. Credit history: Standard and preferred insurance companies often use credit-based insurance scoring to determine the premiums for a particular motorist. According to insurance statistics, there is a positive correlation between claims that are higher and those with bad credit. A few well-known companies might reject applicants simply because you have bad credit (such a recent bankruptcy). Insurers may offer lower rates for the same coverage if the wife has better credit than her husband, even if she was the primary applicant. Other companies might “average” the credit of both spouses.

Non-standard insurance companies don’t use credit-based insurance scoring. Standard carriers that use credit-based insurance scoring may offer additional insurance programs that don’t check credit but limit liability coverage (maybe a state limit to reduce the risk of insuring people with bad credit).

2. MVR. Motor Vehicle Report is an acronym that stands for Motor Vehicle Report. It’s a document that records the driving record of individuals over a specific period (e.g. 5 years). The state’s motor vehicle department keeps the report current.

A motorist is convicted for speeding, DUI, reckless or other traffic violations. The motorist’s MVR will record the incident along with the severity of the offense. The MVR is used by the majority of insurance companies to determine the premium for a particular motorist. It is also used by some employers to screen and select potential employees.

3. C.L.U.E. Report. C.L.U.E. C.L.U.E. (Comprehensive Loss Underwriting Exchange), is a claims history database that ChoicePoint created. This allows insurance companies to access consumer claims information while rating or underwriting an insurance policy. This report is based upon information from insurance companies, such as name, policy number, and date of birth. It also contains information on prior claims such as date, type, amount, and description of vehicles and property. It does not contain any information about credit history, tickets, moving violations or accidents. The CLUE report may include claims for stolen vehicles, hit-and-run claims, vehicles that have been set on fire, and vehicles that were hit while being driven.

4. The Application. The Application. This is the main source of current information about you. Although the questions for each insurer may differ, the majority of applications aim to collect updated information about potential drivers, including their driving records, addresses, marital status, and any health questions that could be relevant to their ability to drive. Insurance companies may have access to information about applicants from other parties. However, applicants are responsible for verifying and correcting the information provided on their application.

Incorrect information is a sign that an applicant has misrepresented themselves. If the truth had been revealed by the applicant, an insurance company will not issue the auto policy. It may also have issued the policy differently or with fewer benefits or a higher price. An insurance company can cancel a contract if it is found out that an applicant made a mistake in their auto insurance application. Insurance companies have used the material misrepresentation defense for years to stop claims. While insurance companies use the term “material representation defense”, policyholders and lawyers refer to it as “post claims underwriting.” No matter what the term, applicants must be exact when providing information to insurance companies. This will ensure that they are fair to both themselves and their insurer.